Step Back for a Moment to Review Positions

George Brooks  |

Brooksie’s Daily Stock Market blog: An edge before the open.

Tuesday, May 3, 2011 9:23 am EDT

DJIA: 12,807.36
S&P 500: 1361.27
Nasdaq Comp.:

Russell 2000: 854.27

Today: mixed-to-down at the open after traders used buying yesterday created by news of bin Laden’s death to sell. The damage was minimal, and we are back to the basics – a bunch of uncertainties, which may be enough to cool the market down, but create some selective opportunities.

Is AI Ready for Prime Time?

It appears that August 2 will be the new deadline for the administration and Congress to approve raising the debt limit. The extension, engineered by Treasury Secretary Timothy F. Geithner, may be necessary since both parties are not close to an agreement on deficit reduction limits. The legal limit is May 16, but the drop dead deadline was July 8. It was the latter that Geithner extended.

Most of the positive impact of Q1 earnings reports has been discounted by the stock market, and we are now faced with a summer of uncertainty, what with concerns about the economy and inflation.

I think it would be healthy if the market spent the summer in a consolidation phase with the DJIA ranging between 11,850 and 12,875. What it does depends on how much profit taking develops as hedge funds and significant investors cash-in on handsome gains racked up Q4 of 2010.

Let’s not forget, the BIG money has turned this into a casino, a numbers game where the direction of the market and individual stocks is highly impacted by computers programmed by math whizzes, et al, who devise algorithms that are expected to exploit unreasonable excesses in stock prices in search of a tiny gain on a huge position, or better yet a fat gain on a huge position. I’ve been led to suspect, egos can get involved at times (read: “The Quants”).

George Brooks

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