(Marco Bonelli) Even a dead cat needs to breathe in order to bounce!
Some hot-air talk and shallow politicians' promises to promote growth could be enough to help oversold stocks stage the famous rebound. At least the Dow Jones, SPX and Nasdaq are still above and close to their 200day MA, which could work as support, although the same levels didn't work to well for the Russell 2000, Dow Jones Transportation and Value Line Index.
Is there hope that the dead cat will finally walk again? Disappointing macro-economic data, three weeks of frustrating trading sessions with failed rebounds each single day last week, now FB trading below issue price and the outlook for earnings further deteriorating, do not leave a lot of hopes. In more detail, Q2 earnings estimates call for -0.5% (-1.2% ex financials) as investors hear of margin pressure and flat revenue growth on all fronts that make the Q1 reporting season and the broadly anticipated economic recovery picking up steam in the second half of this year look like a beautiful dream.
Although there is no guarantee (there never is) and data from the housing sector, April's Durable Goods Orders and a wave of global PMI estimates could tell their own stories, the chance of a technical rebound looks better this week than last as various M&A activities provide a bit of encouraging news, as commodities stage another attempt to stabilize, as some major averages move closer to more serious support levels and as sentiment dropped further into bearish territory, but market players may not expect too much as the result could easily be one of the creature from Stephen King's "Pet Sematary".
Trade well.
(Marco Bonelli is the Managing Director of International for CL King & Associates in New York. The opinions expressed are his own.)
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