Quite a Week for Stocks
Jul 13, 2010
Posted by Jody Eisenman | Filed under Uncategorized
Inter-day on July 6, the Dow Jones bottomed at 9685. It had been falling for days, and many technicians were predicting a long dreary summer for stock prices. Instead, the market turned on a dime. For the week, the Dow and S & P were up over 5%, their best week in about a year. For year to date 2010, the indices are down 2.2 and 3.3% respectively. The question is, where do we go from here?
There are several divergent opinions on this. For example, Doug Kass, who runs a hedge fund called Seabreeze Partners, has stated that he believes that the market has made its’ lows for the year. Kass is famous in my book for called the lows of the market, almost to the day, in March of 2009. Of course, he has been wrong before. However, Kass is known as a short seller, and the fact that he is now bullish has some significance.
On the other extreme, you have Robert Prechter. Prechter follows a form of technical analysis known as the Elliot Wave Theory. Prechter has made rather extreme predictions in the past, with some spectacular successes as well as failures. However, he now believes that the market is at the beginning of a long decline, which could eventually send the Dow down to 1000. Quite a difference of opinion!
I’m in between these two extremes. I think the direction of the market will greatly hinge of several economic factors, but earnings reports will play a big role. As second quarter earnings season begins this week with Alcoa, we should have a better picture of where the market is heading.
