Let the good times roll
by Peter Switzer
The Nasdaq put on close to two per cent overnight and the S&P 500 was up around 1.5 per cent.
Focusing on the broader S&P 500 index, it too is up over seven per cent in the past six trading sessions closing at 1,095 and it’s the best six-day gain since 2003!
This has to be a great lead-in today for our market and yesterday’s fall was inexplicable despite the market experts pointing to China concerns. To me it was just profit-takers but they will be buyers today.
Over the past six days on the US markets, financials have been up 10.2 per cent, materials 9.2 per cent, tech stocks 7.8 per cent, consumer discretionary 7.4 per cent and energy 7.4 per cent. This shows there must be growing belief that the global recovery is fairly solid and the double-dip talk of a few weeks ago looks like that — talk.
Helping the market were the reports of Alcoa and transport company CSX which both did not have negative outlooks for operations in the current third quarter.
Watch the bellwethers
Another positive was the CEO and chairman of GE, Jeff Immelt, who said the US economy was getting better. This is a company in so many sectors of the US economy and is a great bellwether business indicator. The company reports on Friday and the market players will look closely at its figures.
Another big plus was Intel, the world’s leading chip maker, which beat expectations on the top and bottom lines and this comes in a quarter when the company doesn’t often report good results.
Outlook for the year
Let me be frank. This is a great comeback after the correction, which was overdone, and if many US companies can keep adding to the rosy outlook then this rally will have longer legs. However, economic data will have to kick in to support the rally and that will be the market test.
I still think we will rally and then another correction will kick in, say around October before a Santa Claus rally closes out the year on a high.
For those wondering, for the local trade today BHP-Billiton and Rio had good trading sessions in the US and this should spill over into our market. If it doesn’t it could look bad for Prime Minister Gillard’s new resource tax, which is copping a bit of bagging from smaller miners and the likes of Andrew Forrest from Fortescue Metals.
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Published on: Wednesday, July 14, 2010blog comments powered by Disqus