Thursday, April 24, 2008

today's market

strength in the dollar and a good earnings report from aapl triggered some dramatic sector rotation. commodity and cyclical plays that are sensitive to the dollar, such as steels and oils, pulled back sharply, while market players bought retailers, financials and semiconductors in hopes that new leadership was starting to emerge.

that is exactly the sort of shift that the market needs in order to work higher. groups like fertilizers, solar energy and base metals have become too extended for prudent buying, and we needed to see that buyers were secure enough about the market to shift into some new sectors. that is what has happened, and now the test is going to be whether the groups that lead today can gain some momentum.

one of my biggest concern at this point is that after the msft report tonight, the major earnings reports are just about over, and we will no longer have those catalysts. this move has probably been fueled by low expectations and then some good reports from goog, intc, ibm, aapl, etc.

we ended up with a weak close after some euphoric intraday action, and now we have a flood of earnings reports tonight. msft numbers are out and look slightly ahead, but guidance is light, and the stock is trading down. there will be a lot more to come there, but it doesn't look like any big blowout, and the response so far is fairly tepid.

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