(By Rich Bieglmeier) Tuesday was a car crash; one of those Autobahn, high speed, multiple car and truck pileups, surrounded with the sounds of tires squealing, metal on metal crunching, and shattering glass racing across the pavement like water droplets on a hot pan.
Meanwhile, onlookers wear a blank stare, mouths agape, with that what-the-heck just happened look – dazed.
Think it's over the top? Consider this, the day started with Moody's cutting Germany's debt outlook to negative; the same Germany that's the savior of Euroworld. The ratings agency says the risks from the EU debt crisis and their impact are likely to cost more than anticipated. Oh, and the Greeks might leave the zone, causing all kinds of Drachma.
Next UPS, United Parcel Service, Inc. (UPS) said the world economy is going to get worse before it gets better. And you better listen as the delivery company is on the economic front lines spanning the four corners of the globe.
Check this out, the company says to expect 1% growth from the US economy for the year. Um, that would be a polite way to say recession – no? Chairman and CEO Scott Davis told the conference call attendees "Economies around the world are showing signs of weakening and our customers are increasingly nervous."
The day ended with a razor blade in Apple Inc.'s (AAPL) earnings. The tech monster missed earnings, reduced its outlook and basically made foolish excuses, blaming rumors and speculation about new products. By most standards, AAPL's quarter was awesome, but the company is the LeBron James of the stock market. The Street expects more than 22% revenue and 20% net income, year-over-year growth. Just like LeBron, it is championships, or you are a bust. Apple bowed out in the conference semi-finals – see ya' next quarter.
Unless it's a head fake to prompt the Federal Reserve into action, Wall Street has taken all the indexes below support and are flirting with fresh July lows, all while posting bearish MACD crossovers. Another bad day and the trio will make waste of their respective 50-day averages. It's not looking good on many levels. iStock is tempted to proclaim that the markets have seen their highs for 2012. The only caveat is QE3's size and start date.
We wouldn't be surprised to see Ben Bernanke and company make a move next week. While Goldman Sachs says to expect more easing in September, Tuesday's Wall Street Journal talked of regional Fed Presidents growing impatient with the pace of the "recovery." Some time ago, we read that the WSJ may get the "scoop" before other outlets as the financial paper seems to have the uncanny ability to make the call.
Based on our weekly sector review, there aren't too many places to hide. Internet stocks popped as potential outperformers, but nearly 100% of it is attributable to Google Inc. (GOOG).
If you are itching to buy, iStock would suggest looking at utilities, especially electricity providers.
On the backside, our technical review puts the consumer and discretionary spending in the spotlight. We see sectors like restaurants and bars, recreational, travel and leisure, and hotels as groups to avoid, or at least to put on a very short leash.