Posted
Apr 09 2008, 09:25 AM
by
Richard Schwartz
UPDATE ON THE STOCK MARKET. Wednesday, April 9th, 2008
Another day of compacted volatility (is that an oxymoron?) yesterday. This time on the lowest daily trading volume in 2008. Thus the stock market continues to draw, in Wall Street jargon, a “line” I’ve started writing about. One way, reason and time frame in which a line forms is after a sharp swing down in stock prices, then a counterswing up, then a leveling off period as the market digests all available news out there. From there we slide into a glassy-tide, type of quiet, sideways period before some new information comes out which the stock market needs to factor in. Looks to me that’s where we stand now as 1st quarter 2008 corporate earnings start to get released. Sure, some surprises like United Parcel Service (UPS) forecast lower today are going to cause some individual market swings. Maybe this quarter’s earnings reports will be the newest factor which causes the next general market move but maybe earnings are already generally factored into current stock prices, it’s hard to predict. Many observers are saying analysts’ overall earnings projections for this quarter and the rest of the year are way too high and will have to come down and thus will drive stock prices down. Maybe so, but maybe these projections are themselves already factored in. It’s not like there’s been no warning of such. Schwartz View: So we wait with the long and short positions we now hold. The big benefit of identifying a “line” in the averages is that when it breaks, when the stock market has enough new information to lurch out of the line it’s formed, the new move is generally one we can rely on to hold for quite some time in the future.
Filed under: Principles of the Stock Market, Richard Schwartz, Trading, Technical View, Charting, Keys to the Market, Day to Day Action, Update On The Stock Market, Daily Update, Perspective, A Line