Tuesday, April 15, 2008

INTC Gets a Boost From Earnings

Top Line: Well, the stock market may have some rally fight left in it after all. Right after the market closed its normal trading, INTC announced their earnings and, while they didn't knock the ball out of the park, the market thought the value of the stock needed to be increased so there was some buying interest. This gives us some breathing room on our latest forecast for an upward move that takes us into May. It's still iffy though.

As we looked at the early news on Tuesday, the PPI (producer price index) put up a monster number, 1.1% for the Month, on expectations of about 0.6%. This was enough to send the Treasury bond prices down but the stock market had other ideas, like not going down but then again not going up much either.

Why stocks should go up on PPI news like that is a question for you to figure out. We don't think the news drives stocks so much as stocks drive the news but this doesn't seem to satisfy many people. Granted, this is earnings season and we could have missed something but the PPI news was really the big news of the morning as far as we could tell.

Of course, that all seems to have changed with INTC's news afterhours. Several tech stocks were higher along with INTC which was up 7% by itself. The Asian markets are trading up on that news as well as some bank earnings reports, notably US Bank. So, all seems to be happy and nice for the market on Wednesday morning.

Our short term view continues to be that we will see a rally that will take up back up to 12,750. We have thought that the rally would go through that number but resistance there has been significant. Any time we get close to that level, the market backs off. We will revisit our position if the Dow chooses to move up toward that level. Right now, we think the immediate danger of a drop is limited, but...

Don't forget our longer term view that the market is headed for a protracted selloff whenever this latest rally decides to give out. We think this is down the road a ways so we aren't going to bother spending too much time on it, except to say that we need to be aware of the trade we are making. It's not a solid opportunity because it should be a corrective move which are always tough to trade anyway.

FSI: 76.07

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