15 April 2021
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Up again

Peter Switzer
24 July 2009
Wall Street has done it again, smashing through the 9,000-point barrier with the Dow Jones rising 188 points to 9069, and the S&P 500 shaking off the 950-mark to go up 2.3 per cent to 976. This will break the bears’ hearts, but they won’t completely go away yet!

On last night’s episode of SWITZER on Sky News Business Channel, I pointed out that despite some negative commentary from some of the US companies that reported yesterday — this includes Wells Fargo, Whirlpool and Delta — the Dow only gave up 35 points, the S&P 500 was flat but the tech-heavy Nasdaq actually went up putting on 10 points.

Buy now or wait?
At the moment, no one really wants to sell and the big dilemma is: do I buy now and see the market fall after the reporting season? Or do I just get in and hope there is no big sell off?

The tech guys say if we break through lower resistance levels, there’s a long way to fall.

Bears think the market could slide in September and October, and the reason for that is the likelihood US consumers and businesses won’t be hyping up their demand for some time yet.

Now that means the top line or revenue won’t recover quickly enough for the next quarter’s results and this could help the bears.

A lot of the better than expected profit results have come from cost cutting and that trick won’t be playable going forward. We have to see demand recover and that’s what I’ll be looking for.

US reports

One green shoot I noticed yesterday out of the States was that homebuilders had a good day and this sector is at the root of the sub prime mess that caused our problems.

On the other hand, some analysts think there is a 30 per cent chance of a stock market pullback soon and so what’s ahead is important.

On the economics front, there will be weekly jobless claims and existing home sales. 

While you were sleeping

Meanwhile companies continue to play show and tell with their corporate bottom lines.

The drama continues and the lack of sellers is a great sign for optimists, but can it last? I can believe that an eventual sell off could happen but I’m not worried about seeing those March lows again.

Last night, the market ignored a bad jobless claims number but there was a good existing home sales stat that helped optimists. This indicator has now done the right thing three months in a row. However, it was the company reporting results of the likes of Ford and 3M that propelled share prices. Ford rose nine per cent and 3M was up over seven per cent.

Others such as eBay reported well and their shares rose 10.2 per cent.

A standout share that fell, which could be a good omen for the US economy, is McDonald's. Its share fell 4.64 per cent after worse than expected sales, but this is one company that did well during the depths of the US recession. 

On the improve

Last night on my program, entrepreneur chef Luke Mangan, who has restaurants in San Francisco, Tokyo and Sydney, said he sees things turning for the better after some dramatic moments. Local comedian Vince Sorrenti, who is a star on the business speaking circuit, also said his bookings were now on the rise after a slow start. These kinds of unusual indicators can be quite insightful.

Even if we do see another pullback, which is likely, those March lows are being put to bed forever. Shane Oliver from AMP told me last night that only a shock event would take us back there and he thought the Dow was heading to 10,000 plus over the course of the year. And that means our ASX/S&P 200 would be testing 5000. Let’s hope he is on the money.

For advice you can trust contact Switzer Financial Services.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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