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Intel and Alcoa

July 14, 2010 – 5:13 pm

Intel reported earnings last night, announcing their best sales and earnings quarter ‘ever’ for the company. This was a big surprise. Adding to that their upbeat projections, and that of Alcoa’s a couple days ago, the feeling on Wall Street is that other companies in related industries also will report strong earnings and upbeat forecasts. Of course that does not necessarily follow but it is a very strong indication.

For Intel it is easy to deduce that stronger chip sales means more chips are being sold to computer makers who are selling those computers not to a weakened consumer, but to a cash rich corporate client who is spending money on upgrading systems to become more efficient rather than hiring more employees. Any recovery out of our economic slump will be led by corporate spending, not the consumer, especially with our current high unemployment level. Maybe we are starting to see that.

Alcoa and Intel are bellwether stocks. They are considered leaders and if they do well many others in the industrial and technology sectors do well.

Good Trading
Steve Peasley

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