July 23, 2008
A couple of ways to look at the market today. Both a bullish and a bearish perspective. First, the bulls will argue that today’s rally is proof that we have finally hit bottom. Why? Each rally has been met with a solid follow-through, not to mention the rally yesterday, preceded by a weak opening from the Apple earnings report that saw Wall Street use the morning dip as a buying opportunity.
The bears can argue that we are not too far removed from the recent lows, and that it is entirely unknown as to whether we have priced in all the bad news. Furthermore, it only takes one more bank to default in order to see the same level of panic selling that we saw recently. We are also as overbought as we have been across the board in a very long time. And oil – well, this could be a mere correction that is near its end before rallying once again, and if it does, then the market will respond in kind with another nasty sell-off.
So there you have it – two arguments, each with its own merits. Only time will confirm who is right. Yours and my job is to make sure that we are ready to jump on board when it finally does start to move again.
Here’s the NASDAQ and S&P Charts…