Afternoon Market Summary
01/23/06
After
the painful pullback we experienced on Friday, today wasn’t all that
bad. We expected increased caution and worry after the worst day in
several years but the indices help up fairly well overall. Had we
bounced back with a vengeance, many would have called it a dead cat
bounce and any gains would have had a high probability of failure. It
looks as if the heavy selling has taken a break at least for the time
being and the bulls did a good job of holding us steady.
Breadth was slightly positive on the day and small caps were once again
strong, both of which bodes well for a bullish argument. However,
continuing to dampen our spirits once again was metals and oils which
each gained over .5% on the day in leadership fashion. Interestingly the
gains in energy stocks came even though energy prices in general were
falling which tells us the investors will move toward solid earnings
numbers in a sour market.
We believe this gridlock will be settled by earnings season, which is
now in full swing. We’ll be watching key companies such as Texas
Instruments (TXN) which is on tap any moment for an indication of what
to expect going forward. There is a lot of talk about how poor large cap
earnings has been and should this trend be derailed, it may breed some
life back into the market. On the flip side if the poor earnings
continue, we may be in for further selling. Either way, it will be
important to remain cautious and quick.
Have a good evening.