Business News

Up, but not convincing

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by Peter Switzer

Wall Street finished in the black but it was not all that convincing with conflicting signals making it hard for market players to be decisive about buying or selling. At the moment, I would describe the mood as scared to sell but scared to buy and news events will determine what happens next.

That said, the technical analysis is telling me that some kind of pullback or sell-off is on the cards but as most of my guests on my Sky Business program, SWITZER, indicated last night — there is no expectation of a massive share dumping exercise that characterised stock markets last year.

For the record, the Dow was up 71.82 points, or 0.56 per cent, to 12921.41, while the S&P 500 was down 0.69 points to 1369.57.

The reality is that Wall Street is having difficulties shaking key technical levels, just as our S&P/ASX 200 index has struggled with the 4300-level, while the Nasdaq finished sharply in negative territory.

A big US story has been Apple’s five-day losing streak which explains why the Nasdaq ended down overnight. The company has had a massive run-up and now faces legal action as well but its situation is similar to the overall market that looks in need of a correction after a great run-up. The stock is up close to 45 per cent this year!

Keeping things positive was a better-than-expected retail sales report but this was offset by a poor homebuilder sentiment reading. There was also a spike in business inventories and manufacturing in the state of New York fell pretty steeply, which continues the run of mixed economic data out of the US over the past two months.

We are in a 50:50 economic situation with the US economy and the worries over European debt and that’s why the markets are, you guessed it, 50:50.

I think the bears will eventually test the market out but they won’t get as much satisfaction as last year — thank God or more correctly the European Central Bank.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Tuesday, April 17, 2012

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