Bulls Snatch Victory From Jaws of Defeat
Mercenary Trader | Jul 30, 2012 10:20AM ET
Last week, the bulls pulled another save out of their hat -- turning what initially looked like a losing week into a respectable advance to a new 12-week high. The broad market rebound came on the heels of three individual policymaker statements, all aimed at restoring confidence and reviving sentiment before the selling could pick up momentum.
The first statement came late Tuesday afternoon, as the Fed channeled information to their unofficial mouthpiece, WSJ Editor Jon Hilsenrath, indicating that officials were becoming more willing to embark on more stimulus measures. The indication was that policymakers were now questioning whether to take action at the upcoming meeting July 31 and August 1, or to wait until the September meeting.
The last week , earnings numbers have been coming in ahead of expectations, but companies have been reporting light revenues. Guidance numbers have also been coming in below expectations as management teams realize that it is going to be difficult to achieve targets in a very tough economic environment.
Heading into the week, we’re watching for bearish setups which will only be entered if the price action moves in our favor. We’re unable to justify chasing the bullish action in the broad indices without at least a few days of consolidation, while short entries in names that have already broken and consolidated offer the best reward-to-risk scenarios.
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