Afternoon Market Summary
10/19/05
Today’s action could possibly be the start
of what we would like to see going into the
4th quarter. We had what is
technically called a ‘key reversal’ day
where the negative open washed out the weak
hands and then we ramped straight up on good
volume. While we are not throwing caution to
the wind, today’s move was very encouraging
and makes us optimistic that we may have a
bottom in place.
As we came into the day, market
participants were focused on a poor report
from Intel (INTC) and yesterday’s PPI
numbers. During the early going the red
continued to flow and breadth was almost 3
to negative. It was exactly what was needed
to wash out the early and overly optimistic
bulls, who had rushed to embrace the recent
dead cat bounce.
As we went through the day, sectors we like
to see lead us higher greatly improved, led
by retailers closing up over 2%. The
semiconductors or SOX index was weighted
down most of the day by Intel (INTC),
however it managed to grind its way from
being down close to 3% to down roughly .50%,
which is a very respectable comeback. That
sort of bounce on bad news is a sign that
the worst is being priced in.
While the market’s move was impressive
today, as we mentioned previously we can’t
throw caution to the wind after just one
good day. It will be very important to
observe the action closely in the days to
come.
TSP members who have listened to our caution
over the past several weeks may consider
taking the opportunity to reposition some
funds, slowly back into the market. We
wouldn’t advise loading up; as a good market
will provide plenty of proper entries and we
won’t be completely convinced we are out of
the woods until the technical picture
improves quite significantly.
Get out that shopping list and start to
re-build those positions, but be cautious as
a few poor earnings numbers could dampen the
party, very quickly.
Have a good evening.
RevShark