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Market Watch Looking Ahead at Citigroup, JP Morgan, Bank of America, Wells Fargo
Market Watch Looking Ahead at Citigroup, JP Morgan, Bank of America, Wells Fargo 
Market Watch
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The Last Recession... The Next Recession? Karl Marx once said, “History repeats itself, first as tragedy, second as farce.” If you want a clue as to how the economy and market will act during the coming recession, you need look no further than the charts for 1998-2003. |
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| Looking Ahead at Citigroup, JP Morgan, Bank of America, Wells Fargo |
| Wednesday, 17 October 2007 | ||||||||
The coming week will be all about earnings.The Internet sector has been on a tear, and Internet giants Google, Yahoo and eBay are set to report earnings. You must assume that expectations are high, and it will be interesting to see if good earnings news can keep the price momentum going.Tech bell weather Intel is also set to report; in addition, major pharmaceutical and consumer goods companies will report in the following week. The major economic report for the coming week will be September’s Consumer Price Index (CPI), which is due out Oct. 17. My TakeThe chart "Investor Sentiment" is our proprietary Investor Sentiment Composite Index below a weekly chart of the S&P 500. This indicator looks for extremes in the data from four different groups of investors:
I've been showing this indicator in these commentaries for several weeks now. Investor SentimentAs expected, the indicator has swung to an extreme, suggesting that too many investors are embracing this market rally. From a contrarian standpoint, this isn't good for higher share prices. However, it takes bulls to make a bull market, and there have been significant price gains when there have been too many bulls.
Extremes in investor sentiment are often an early signal, and anticipating when the trend will end can be costly to the bottom line. Trends tend to persist in the markets longer than most expect. Nonetheless, extremes in bullish sentiment are noteworthy, and they do imply that the best, most accelerated market gains are behind us. So what could derail this market advance? Inflationary pressures would seem to be the most likely culprit. Long-term interest rates are worth watching, and the chart below is a daily chart of the yield on the 10-year Treasury bond. Yields on the 10-year Treasury BondAlthough yields are currently below the 200-day moving average, this miniature head-and-shoulders bottom is a launching pad for higher yields. If yields do break out, then I'd expect yields on the 10-year Treasury to reach 5 percent.This could give investors pause and be a headwind for the markets. Source : Trader's Talk This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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