NOTE: Every week or two I write a Client Note for my clients. For a limited time, I am allowing non-clients to sign up and receive it at the same time as my clients. You can sign up at the top right hand corner of the website. I will also be posting the notes on my blog with a time delay from time to time.
Originally sent to clients July 28.
*****
The market is crazier than a rat in a coffee can.
– Jeff Macke
In the month since my last Client Note, the market appears to have lost its mind. The news flow is the same – European sovereign debt crisis, US debt ceiling and earnings – but the reaction lurches to opposite extremes on a day to day basis. Since the beginning of May, the Dow has had 19 100-point days out of 62 total – 10 down and 9 up.
Reaction to 2nd quarter earnings has been similarly bipolar. Some stocks have surged post-earnings while others have been hammered. The market loved earnings from Google, Apple and Amazon, pushing shares up an average of 8.00% in the days since. But it hated earnings from Caterpillar, UPS and 3M, punishing shares an average of 8.41% since their reports.
To orient ourselves amid all this volatility, note that the S&P is right in the middle of its 2011 trading range. Technically, a sustained break above 1370 would signal the next leg up in the bull market. A break below 1250, on the other hand, would signal the beginning of a bear market. Until one or the other happens, we’re stuck in the middle.
NOW IS THE TIME TO INVEST WITH TOP GUN: If you have been thinking about investing with Top Gun, now is a good time to give me a call or send me an e-mail.
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