After an ugly morning, buyers managed a bounce before the close. Breadth was 4-to-1 negative and the small-caps were particularly weak. A big move in Apple helped the NASDAQ, but it reports earning tomorrow and will be interesting to see how much of the good news is already priced in? IBM just reported and the stock is up about 2% after hour continuing the rally in recent reporting marquee names like JPM, C, and IBM.
Market players continue to worry about the debt issues in Europe and the debt ceiling negotiations in the US. In addition a Goldman Sachs report late Friday stirred up worries about a double-dip recession. The market is again back below the 50-day simple moving average and oversold with fear picking up. It is not an illogical spot for the market to hold but it will need some help from the news flow. Will it be different this time?
As a bit of anecdotal evidence for the bears, the mom and pop 401k investors are getting more bullish. Â I just received our company 401k distribution list for the 2nd quarter and I noted a shift to moderate to high risk investment. 80% are now invested in the moderate to high risk funds and 20% in low risk and stable value funds. At the same time last year we had 70% investment in moderate to high risk and 30% in low and stable value funds. There is also a pick up in the very high risk category from 48% (2nd quarter last year) to 62% so far this year.
