In our earlier post “Earnings Pouring In Market Still Rangebound..” (http://street-cents.com/2009/07/21/with-earnings-pouring-in-market-still-rangebound-what-lies-ahead/) we stated that so far the earnings had been pretty good but until further notice the market is still rangebound.
The move yesterday moved markets decidedly above our high water mark of 940 on the S&P 500, showing conviction by investors that, yes, the world is getting better.
Housing Starts and Intel
These two items seem to be the catalyst for investor conviction, with Intel reversing the market’s move earlier this month and good Housing numbers to push us higher. Again, looking ahead, as that is what matters most, we feel that many investors were very surprised at the recent move and will have to play catch-up deploying cash on pull backs. Until this investor money, (mutual fund managers) is fully deployed, pullbacks may be small and even hard to come by.
Within two weeks, earnings season will be over and the markets will be left to the amateurs again. Currently markets are responding appropriately to fundamentals, ie good things lead to stronger prices and visa versa. This may change as we near the end of the summer. Remember, rarely do markets move in a straight line, but we may have legs for a while longer. JK