Up, up and away… not so fast!
by Peter Switzer
Stocks surged overnight and I hope you read my article last week entitled 'Why stocks suck but you should buy them anyway'.
Last night on my program SWITZER on the Sky News Business Channel, my charts guy, Lance Lai went from tentatively positive to quite bullish. A month ago, he was 10 per cent invested in stocks and now has moved to 70 per cent. Lance would be happy this morning.
He can thank a new EU deal for Greece and a recent US mid-Atlantic manufacturing report.
The Dow was up 152.5 points, or 1.21 per cent, to 12,724.41 while the S&P 500 put on nearly 18 points, or 1.35 per cent, to 1343.8.
Over in Europe, the EU found 109 billion euros for Greece, which could mean a temporary default on some part of its debt but there were other decisions to deal with other debtor countries in the group, which pleased the market.
And while this is a nice outcome, a black cloud of doubt will still hang over Europe and financial markets, so this gain overnight is not necessarily the start of a massive upswing. I expect more rises than falls for a bit but there are still other challenges to deal with.
One of those is the US Congress deal on debt, which also produced some better news but a deal is not done yet.
Economics-wise, a mid-Atlantic manufacturing report in the US had a nice bounce back and the Conference Board’s leading economic indicator index went up in June.
One final positive was a solid profit result for Microsoft, which continues the good run for company earnings in the US.
As a long-term investor, this has been a nice week and I’m glad I went long the market early in the week, but there still are challenges out there but I’m buying good quality companies today for what they will be worth in five years' time, not what they will sell for in five days' time!
We’re up and we could go further up but I don’t think we’re in a big take-off zone just yet.
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Published on: Friday, July 22, 2011
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