George Brooks: Short-Term, It's All About Q1 Earnings

George Brooks |

George Brooks Stock MarketBrooksie’s Daily Stock Market blog: An edge before the market opens.

Wednesday, April 20, 2011 9:24 am EDT

DJIA: 12,266.75
S&P 500: 1312.62
Nasdaq Comp.: 2744.97
Russell 2000: 823.01

Today: U.S. stock-index futures call for a big open with the potential to carry the market averages well into overhead supply and close to the level where the markets broke down Monday in face of S&P’s downgrade of the outlook for U.S. debt.

Occasionally, we get these gap opens, and in many cases it is wise not to “buy the open” without a limit price, the risk being the price at the open may be the high for the day.

Yesterday, I said I believed we have entered a sideways trading range as the “Best Six Months” for investing is drawing to a close. Historically the best six months runs from Nov. 1 to May 1. This time around it started in early September.

Presently, I hold to that, watching to see if the BIG money uses this strength to do some selling prior to the summer. I am not looking for a bear market, just a change in the nature of its trading, ergo a trading range vs an uptrend. Money can be made in both.

Just days ago, the press was reporting concern for Q1 earnings; today it is heralding just the opposite as Intel (INTC) and Yahoo (YHOO) beat estimates. IBM, on the other hand, reported lower earnings, though it is optimistic about full year results.

It appears the Street has recovered from S&P’s Monday morning announcement that it was downgrading its outlook for long-term U.S. debt unless our government develops a strategy to reduce it. The fact both parties have been hard at work developing an acceptable strategy has been well publicized for weeks suggests S&P’s announcement was premature.

IF both parties can hammer out an attractive strategy, what has been a drag on optimism could become a BIG plus going forward, for the markets, our economy and the United States’ positioning in the world.

George Brooks
sensiblesleuth@gmail.com

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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