Road To Nowhere Still Upon Us…
And that could be the end of this report. What is there really left to say. The bulls and bears come to the ring each day prepared to fight, and on any given day, either side can score a victory, but when you look back at the fight after 15 rounds, you see that no one has won and that both sides are bloodied, neither one looking all that good. When you look at the two fighters all you see is different body types. You wonder how someone could legally allow such a fight to take place, since one candidate looks so much bigger and stronger than the other one. It's no different for our stock market.
You wonder why the bulls even bother showing up at times. They are so much weaker than their opponent, yet, they do alright for themselves. You figure, with our economy moving into recession, and with Europe in terrible shape, it's really a throw-in-the-towel situation. It’s not to be, because that weak opponent has a secret weapon. An unfair one. We'll call it steroids, since they're so popular these days in the world of sports. The new way to cheat. The cheater in the market being Mr. Bernanke. He speaks and the bears shake. Can't blame them.
He's always interfering, and telling the bears you better watch out, because, in a moment’s notice, I will pump the system full of cash, and you'll be left crying at your computer screens. If he weren't around to bully the bears, this market would be in free-fall to the down side. But that's not the case, and thus, the market is doing a great Houdini trick as it holds up against some very impossible odds. It’s no fair, but whoever said the market was played fairly. It's not, never has been, nor will it ever be played fairly. You accept the things thrown at you by simply adjusting to the situation at hand. For now, we're nowhere, and who knows how long that'll last. Not I, nor anyone else. Things remain flat for now.
The Fed comes out early next week with his usual banter about the economy, but has threatened to do some form of economic stimulus the market can feast on. He made that known yesterday when, with thirty minutes roughly left in the trading day, an article came out from the Wall Street Journal stating that stimulus of some type was on the way very soon. That led the market to believe it's coming next week. It may be grand in nature or timid.
We can guess all we want, but no one knows just how strong it will be. This somewhat of a guarantee has the market bears a bit timid in their piling on behavior. He may actually do very little, or nothing at all, but he knows the market won't be happy with that. My guess is he's preparing the masses for something a bit more powerful than any one may think was coming. The market is likely mostly on hold until they see what's up with the Fed next week.
One potential positive for this market is the behavior from the semiconductor stocks. Many of those stocks, and the sector itself, are looking like it may have put in a long-term bottoming pattern. Great earnings from Broadcom Corp. (BRCM) and Analog Devices, Inc. (ADI) along with Intel Corporation (INTC) lately, and good action from KLA-Tencor Corporation (KLAC), are hinting the worst of that world may be over. It has been a long and grueling move lower over the past few years for these stocks, thus, it would be a huge positive for this market, if that sector was actually on the way to bottoming out.
Some good looking oscillators on those daily charts may be telling us the bottom is in, but you can't know, for sure, until we see how it holds up into deeper market session. If it refuses to pull back hard in price, and/or the oscillators remain strong, then that would be the necessary cherry-on-top-of-the-cake to tell us things will be getting better in that part of the stock market world, and the bulls can use that as ammunition. We shall see shortly.
Apple Inc. (AAPL) couldn't kill the market on their miss, but that doesn't mean the bears have no shot, for they still have a decent chance of taking this market down. But they need to remove, at least, the 200-day exponential moving average on a leading index such as the S&P 500. 1322 is the current level we need to watch carefully in the days and weeks ahead. If they can take out that level, they will have some momentum, and may be able to turn the market a bit more directional.
Patience as we learn more in the near-term.