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The Road Up … Earnings

July 13, 2009 – 9:43 am

This week’s market direction will likely be the result of a number of earnings reports being released. Over the next few weeks earnings will be the prime driver of stock prices. The earnings themselves will be poor. That in itself will not be the driver of stock prices rather it will be what the corporations say about the next quarter or year end numbers. The market looks forward and everyone expects a bad reporting season so the actual numbers for last quarter is old information.

Meanwhile, we are in the midst of our summer doldrums. Stock prices have drifted lower for about six weeks. This is not an unexpected event. In 2003, coming out of the dot.com bubble burst starting in 2000, the stock market started to rally in March. However, in June and July 2003 the market paused before it picked up again and rallied to the end of the year. I think we are on that same path.

For that path to come true it’s all about earnings, just as it was in 2003.

Good Trading
Steve Peasley

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