About Shark Watch
Tuesday, July 29 - 4:32 PM
While there is no arguing that the majority of the strength today resulted from the hope that the MER news may mark the beginning of the end of the bad news for the financials, there was plenty of good news to go around. Solars managed to buck the trend in energy stocks following news regarding subsidies in Spain, oil pulled back once again, consumer confidence came in well ahead of expectations, and X blew earnings estimates out of the water.
As such, the market enjoyed a broad-based rally and is now in a position to possibly put in a higher low. Given the dismal action we’ve seen over the past two months, a good counter-trend move is certainly possible. Plenty of folks are underinvested and if buyers can build on this, and in particular, push the averages to fresh short-term highs, then we may start seeing investors get nervous about missing out on another move like we saw back in the March-May intermediate uptrend.
That said, we’re still waiting for some group to step up and show some leadership. Obviously, folks are thinking that the financials may assume that role, but even though that group may see some more upside in the near-term as market players assume that the worst has been priced in, we suspect that the banks and brokers aren’t completely out of the woods.
The bottom line is that, while we may be set up for some decent action, this market has a lot of work to do before it’s time to build more substantial positions.
Have a great evening and we’ll see you tomorrow.