Today's Comments (Short Term Outlook)                             Printer friendly

Intel impresses / Inflation a concern Stocks chopped around Tuesday but finished strongly to end the day up about one half of one percent on another day of light trading.  The early weakness was due in part to the higher than expected  Producer Price Index (PPI) report. Bonds sold-off on the high PPI number (1.1%) as inflationary data can put a damper on the Fed's interest rate cutting parade.  The Fed is in a tough position with an economy facing both a recession, and inflationary pressure.  Today's CPI (Consumer Price Index) will either confirm or muddle the inflation picture.  Intel reported earnings in line with estimates with sales ahead of expectations.  They put investors at ease saying, "Our first-quarter results demonstrate a strengthening core business and a solid global market environment."  This could be just what the bulls need to stop the bleeding for now, but the market has more to prove before we can say the downside is over.  We could see a pop in the short-term, but if you look at the chart of the S&P 500 below, you can see a small rally here would just be par for the course during this bear market. We have seen three complete series of 4-point patterns with 1 being the peak, 2 a pullback, 3 a lower peak, and 4 a deeper sell-off.  We seem to be near point 2 in this series' fourth time around.                                       Chart provided courtesy of www.decisionpoint.com If it plays out, we could see a rally to a peak just below the fourth peak #,1 which stalled near 1395.    Outside Day Yesterday's action also produced an "Outside Day" which can be a reversal pattern.  Usually the wider the spread the better so this wasn't a great indication of a reversal, but the fact that the outside day closed near the upper end of the day's range is a positive sign for stocks.   So far, the Intel earnings report seems to have enough momentum to follow-through on the outside day's bullish reversal.  Intel was trading up about 6% after hours yesterday and the major indices futures were also up nicely.  But we do have today's CPI report and earnings from IBM, ebay, Coca-Cola, and Wells Fargo, to name a few, so anything can happen.  Expect the worst, but hope for the best. That's all for today.  Thanks for reading.  See you tomorrow! ------------------------------------------------------------------------------------------------------------------- ** By joining our email alert list you will receive an email each time we initiate a transfer or change our market outlook.  You may also receive an email each Monday morning reminding you that our comments are updated daily.  We will always send out these emails prior to making the transfer myself but we can not guarantee you will receive it in time to make a transfer yourself.  By joining you understand that this is what the owners of TSP Talk are doing in their own account and if you decide to follow our transfers in your own account, you do so at your own risk.  There is always a possibility for a loss in your account.  These transfers could come very often and you may have to act quickly to make the deadline.  Please consider your investment strategy before taking any advice or making any transactions.  By reading the contents of TSP Talk.com and accepting the email alerts, you must agree to the Terms of Service.  Thank you. TSP Talk