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Despite the overwhelming tide of bad news from Q4 earnings reports, stocks not only held above the support line at Dow 8,000 and S&P 500 800 Monday, but the stochastic indicator on both the NYSE Composite Index and the Nasdaq issued buy signals.
Our other internal indicators are still oversold, and the CBOE Volatility Index (VIX) fell to 45.69 and appears to be headed lower -- which is generally a bullish sign.
The key, however, to moving the markets higher could be the financial stocks.
This week, a number of closely watched banks, such as Dow members American Express (NYSE: AXP) and Wells Fargo (NYSE: WFC), will report earnings. The expectation for all of these former finance powerhouses is low, so upside surprises could have a positive impact on the Dow.
And other Dow members, such as Exxon Mobil (NYSE: XOM), Boeing (NYSE: BA), Chevron (NYSE: CVX) and others, will undoubtedly impact the important technical support zones just under yesterday's intraday lows.
My trade of the day is homebuilder Pulte Homes (NYSE: PHM)
The stock's November low matches a similar low in October and, combined with technical buy signals, including a new one from the stochastic, it could be telling us that a major long-term base has formed.
Sam Collins is a contributor to OptionsZone.com.
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Reader Comments (Page 1 of 1)
1-27-2009 @ 12:45PM
BHarrison said...
The basic problem of all is that there simply is NO INTEGRITY in the financial reports of a vast number of FIs and corporations. The CRIMINAL use of "creative accounting practices", such as "off the book items" in balance sheets is nothing more than blatant FINANCIAL FRAUD . . . it is CRIMINAL FRAUD.
There can be absolutely no "faith and confidence in the corporations or the markets until Congress passes legislation and establishes effective oversight to INSTILL INTEGRITY in the financial reports of corporations, the markets/funds, etc. No prudedent and reasonable perrson is going to invest in manipulated, corrupt, and fraudulent corporations in a decling market/economy. The stock markets are a FOOL's market. Without INTEGRITY in the financial reports,there will be very little "recovery". Congress is the PRIMARY CULPRIT in all of this.
Why hasn't Congress moved to act on the criticality of the INTEGRITY of the corporate financial reports???