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Into the breach with stocks

July 20, 2009

It’s hard to ignore the momentum in the U.S. stock market.

Over the last week, solid second quarter earnings, the last-minute save of the troubled lender, CIT Group Inc, by bondholders and a rosier stock outlook from Goldman Sachs analysts have conspired to make investors feel good again about stocks. The benchmark Standard & Poor’s 500-stock index has responded in kind.

Up roughly eight percent over the last week, the index is moving further away from the most recent nadir hit earlier this month amid concerns that increased joblessness would stymie an economic recovery. On Monday, it also crossed through a key threshold, one that opens up the road to 1,060 by the end of the year, a forecast that Goldman Sachs analysts laid out in a research report Monday.

The level was 950. While this may seem just like another round number, 950 represented a threshold that when breached signals a significant turning point for the better in the stock market.

And it’s about time. The index’s sashaying between 850 and 940 for months made for a frustrating dance between bulls and bears who both wanted to take the lead on the market’s direction.

Surpassing 950 hasn’t been easy. There was one serious attempt in early June, but the S&P hadn’t closed north of that threshold since early November. And even on Monday, it took several attempts until the index finally broke through in late trading to close just a hair above 950.

Earnings from the likes of Morgan Stanley, Wells Fargo
and Ford Motor Co due out this week, however, could add to the momentum, especially if they outshine expectations like corporate earnings did last week.

According to Thomson Reuters data, of the 55 companies that reported, 71 percent exceeded analyst expectations, up substantially from 61 percent seen in typical quarters since 1994. They’re also beating them by a wide margin. The surprise factor is 11.2 percent above expectations versus the 1.7 percent long-term average.

Though a piece of lackluster economic data could easily push the market south again, a decisive break above 950 signals this rally is the real thing and 1060 isn’t that much further down the road.
(Editing by Martin Langfield)

Comments

Dear Missus !!

Looking at the developing earnings scene is not only for the birds but also an OLD paradigm. Prices of shares went down the tubes, so did their sidekicks ( earnings) no brainer here.

Talk about GROWTH dear one……. and nothing else, now that would be a little more……..intelligent !!!!

BYE !!!

Moe

Posted by Moe the Wiesel | Report as abusive
 

Why would anyone give credence to what Goldman has to say. They are at their pump and dump schemes yet again. One side of the firm shorts the market and the other comes and pumps the market so that they can make all the more money.

So we know the game GS is playing, so lets join the game with their short side and wait for the boom to go for some more before it goes down and make money just like GS plans to do.

Isn’t Abby Joseph Cohen the Internet forecaster at GS who told that tech stocks were going to hit the stratosphere.. she still works there. so we know the game GS plays

Posted by SP | Report as abusive
 

The article fails to tell us something we dont already know. I also agree with the previous post by SP that GS are the last ones to listen to

Posted by Fad Ahmed | Report as abusive
 

So I am not the only one who doesn’t give much credit to the recent market move, which to some extent looks like something purposedly made to deceive investors.
I am not an expert of technical analysis nor of economics in general, but the divergences that can be seen from both points of view point low, and maybe lower.

Posted by Lightmare | Report as abusive
 

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