Are we there yet?

Yesterday I predicted a test of our lower levels: Dow7,900, S&P 833, Nasdaq 1,580,NYSE 5,225 and Russell 444 and we finished at Dow 7,841, S&P 832, Nasdaq 1,608, NYSE 5,220 and Russell 452 so an interesting balance there. The Dow is, by far, the easiest index to manipulate and the Russell is the hardest. It took the Russell all afternoon to leg below our first breakdown point at 456 though, so it’s possible they’ll catch up today but that would be bad as they’re holding us up at the moment. As I said yesterday, below these levels is another5% gap down toDow 7,636, S&P 805, Nas 1,525, NYSE 5,075 and Russell 420 before we hit any real resistance.

As you can see from TraderMike’schart, we have abig air pocket below our S&P close and we certainly haven’t had the kind of volume we’d expect toput in a reversal. It can happen today if we aretruly moving back to a stock picker’s market as we have both winners and losers in today’s earnings reports butnot if you read the Wall Street Journal, where solid earnings and outlook from Dow components DD, IBM and BAC are turned into tabloid fodder with the headlines: “”IBM Proftit Slips Amid Weak Sales,” “A $4.2Bn Profit Isn’t a Fix for BofA” and “DuPont Posts 59% Drop in Profit.”

DD beat by 2 cents a .54 per share on lower revenues but guided in-line for the year. BAC blew the doors off expectations yesterday but bloggers have declared them insolvent and that stock tanked yesterday (we’re buying today)and IBM beat by 2% yesterday,guided in-line for the year and guided up 15% next year but at least The Journal managed tomention that revenues at IBM were only down because the strong dollar meant they collected less foreign revenues despite strong sales orders. Services revenue was down 10% but would have been down only 2% without currency fluctuations. Services contract signings, off 1%, would have been up 10% at constant currency, IBM said, with longer-term contracts growing. Keep that in mind – earnings are what Rupert Murdoch and CNBCspin them to be if you don’t read the reports yourself!

Uncle Rupert also tells us in the headlinesthat “TXN ProfitDrops 97%” so it may be surprising to see them trading up today but the company was expected to have a loss and they earned .01 instead and: “With demand stabilizing,…
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