Market commentary 7-15-09
The stock market reacted very positively to the better than expected earnings of INTC after the market yesterday. So we have had a string of events that have ignited the market that started with the Goldman Sachs’ earnings (GS), Intel (INTC), CSX (railroad) the last few days and the favorable press on China’s successful stimulus plan and the disclosure of their monies invested in US Treasuries.
If we have additional positive news for the market, this could give support to stock prices although it is prudent to assume that the previous pattern in the stock market will likely resume and to trim our positions in the many stocks that we have had long this last week.
What we should watch for is any other important news that may affect the markets from more positive surprises in earnings to government announcements or favorable economic data. The talk on CNBC about having a super rally from this bottom is very unlikely but a big spike up in indices like we saw today is often a beginning of a larger move upward.
The oil stocks are in full swing moving up and could go for several days up before cooling off. The best approach to these stocks is to sell these long positions at the top of this first run and not to hold them when they correct. If you are taking a longer term approach to these and are willing to hold them through the first correction after this upward run we are having now, it is possible to get higher profits but at a high risk of them correcting and not going back up.