Rev Shark:
I have had many troubles, but the worst of them never came."
-- James Garfield
It was very clear yesterday that this market has some genuine troubles to worry about. The price of crude oil is the most visible and quantifiable, but the major earnings reports we have seen so far are another reason for concern. With the exception of Apple Computer (AAPL:Nasdaq), which is a unique situation and probably not indicative of any broader trend, earnings reports have been mediocre and the market reaction mixed at best.
The bulls hoped that expectations for third quarter earnings were low enough that average reports might attract buyers. We saw some of that, but not aggressively enough to make a big difference.
In addition to worries about crude oil and earnings, we saw a major technical breakdown yesterday in defensive stocks such as mining, steel and oil that have been recent market leaders. Perhaps the market is undergoing a rotation into a new group of leaders, but there were no clear signs of what group that might be yesterday.
There is no question that there are plenty of troubles to contemplate at the moment, but talk about a coming recession and economic calamity serves no useful purpose at this time. There certainly are some difficulties to contend with right now, and we need to do so aggressively, but contemplation of some future disaster is the best way to miss out on upside opportunity when it does occur, and I can assure you it will occur again before the end of this year.
Long-term prediction of our economic fortunes is interesting and provocative, but it does little to help us deal with the problems we face today. The arguments of the long-term bears always sound quite compelling, but they never quite seem to come to fruition. Doom and gloom can make for interesting press, but it generally is useless as a way to make money.
Let's stay focused on what is happening now and worry about the future as it unfolds. Over-anticipation of a gloomy future can blind us to money-making opportunities that exist today.
Early indications are very slightly positive, led by a strong gain from Apple Computer, some upbeat chatter from Nokia (NOK:NYSE) and better-than-expected earnings from a couple of big banks. With the exception of Apple, technology stocks reported mostly lackluster earnings.
Overseas markets were mostly lower, and crude oil is flirting with the $54 mark once again. We have some economic stats to consider today, but the big flood of earnings doesn't pick up again until next week.
Gary B. Smith:
