Stock Market Gap To Gap And Intel Earnings.....

Stock-Markets / Stock Markets 2011 Jul 21, 2011 - 01:59 AM GMT

Gaps above and gaps below. Both sides have set up camp by putting in gap ups and gap downs. Two on each side. Why not. Make things more difficult than they already were. The market seems to be trying to unwind overbought conditions that lasted a bit too long for its own good. It needs time to consolidate that move, and that period of consolidation can be very frustrating for both sides as neither one is able to gain full control of things. You think, here we go to the up side, but no dice. The move gets abruptly halted by either bad earnings news or bad news on the debt ceiling. Then the bears feel they have control.

Things look ready to break lower, but not to be as there is suddenly good news on the earnings front, or good news potentially on the debt ceiling not only getting done, but getting done in a way that will satisfy the rating agencies thus keeping the United States from defaulting. Back and forth and forth and back we go. The news in the future will be the determining factor on which gaps get taken out. The news again being earnings, and the resolution or not, of the debt ceiling.

We saw the market open up fairly flat today. Nothing wrong with that. After yesterday's huge move higher of 61 Nasdaq points and 204 Dow points, it was great to see the market hold the major portion of those gains the next morning. The market tried numerous times during the day to actually sell some, but the buyers were always there to keep the market from falling hard. The buyers are more interested now that the majority of stocks, the important leaders, are saying good things about future earnings. There are definitely some disasters, but those are happening mostly from grossly over valued stocks with astronomic PE's. Fair valued stocks are being overall treated well on their reports, and this is giving the market some real hope. The market is in good shape after today's action, and just needs another catalyst to get another move higher.

Intel Corporation (INTC) tonight will tell us a lot about the very near future. The world will be watching to see whether they show growth in the months ahead, or if they see things pulling in. The report for the past three months should be just fine, but that's not what the market will be focused on. It'll be about the months to come and really nothing else. Will they up guidance or lower it. Will they report improving margins. These are the focuses for Wall Street. The market hung in there very well today. Now let's see if Intel can give the market another boost.

The banks finally had a good day today led by a comeback from recently broken stocks such as Goldman Sachs (GS) and Bank of America Corporation (BAC). These stocks are in confirmed bear markets, but they reversed course today. It doesn't mean they're out of the woods because they're not. They often rally when they get very oversold, and then they fall right back down again, making new lows just about each and every time. They need to reverse the patterns in place but have yet to do, even though they showed some real promise today.

They have been the big laggards of this stock market for years and one good day of out performance does not make a trend change. We want to have hope, and there is some after today's move, but not anything suggesting it's time to be buying any of these stocks. We need to keep a close eye on these stocks and see if the trend can reverse, but that would only happen if we can get another leg higher in this market that would come from continued good earning's and the passing of the appropriate debt ceiling. Patience is the safest for now with regards to these stocks.

Whipsaw is the best word I can use because that's exactly what's taking place. Many see this as bullish. Many see this as bearish. Both sides have valid cases. Fundamentally you can respect the bearish case. It's not as if the economy is rocking. However, it hasn't fallen off a cliff. Yet! It's about fear after fear showing up all over the world in just about every topic you can imagine. The market seems to hang in there. It doesn't go anywhere overall, but that's not really so bad. It fights off one crisis after another.

Some selling takes place as each new problem surfaces, but then the market seemingly finds a way to prevent disaster. Up to now that's been the case. No way to know how the market will react to the worst possible news. We don't want to find out either. So now we're in earning's season and dealing with the debt ceiling, and those are the two big concerns right now. The upcoming weeks will have those issues in the rear view mirror. We're going to find out how the market dealt with it all.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

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