Well, it was nice while it lasted - as we predicted, after a 3-4 week hiatus the days of premarket surges and swoons has returned; for most of 2009 (ex Jan/Feb) its been surges. In fact, I wish someone who had the data would let us know how much of the monster rally off March 6th lows was in premarket hours.
Today's happiness is due to Intel (
) which relative to expectations was a nice quarter. While revenue shrunk quite a bit from last year, they soundly beat expectations. I can't remember the last time Intel was a stock which moved the market this strongly - I'm having flashbacks to 1998. Business was strong (where else?) in Asia, especially (where else?) China; and even the U.S. consumer business was good. (not sure why) Europe was a disaster and enterprise spending (businesses) not so great, but the Asian influence and US consumer stood out. Margins were splendid.
In times like this technical analysis is relatively moot as we are reactive to news. TA works much better in the period we just came out the past month where we are not gapping up and down in knee jerk reaction. But a couple of points - I thought we'd rally at most into the ceiling of the recent range coming into the week, that is S&P 910 which was the 50 day exponential moving average. Those assumptions were outside of a herky jerky earnings period however.
These first 3 weeks are full of the big boys, US multinationals - and with the banks being given every advantage under the sun, and other companies benefiting from the weaker dollar in the past quarter along with exposure to China (and some other parts of Asia) I have been keeping my short exposure very low due to "surprises" like we are having. Plus so many American jobs have been cut, the expense line is really dropping for these companies so they can arbitrage expenses in the US with revenue gains in Asia and still do ok.
Is the Head and Shoulders pattern "done"? No, it's still "forming" - it will either fail or not once we get out of this range. After blasting north of S&P 910, we're already at S&P 920; a lot of resistance was faced at 930 about 2 weeks ago. For this pattern to be broken we'd need to see that 930 first broken and then a "new head" (at least matching recent highs from early June).
