Report, revise, beat… Repeat
“Success is as dangerous as failure. Hope is as hollow as fear.”
The market rally on Friday seemed to have caught some traders by surprise.
The sell-off during the week seemed to be gaining momentum as the VIX was reaching numbers that make market participants sweat. Above 30 seems to be a number worth watching. Perhaps the indices had reached an oversold point and the technical traders stepped in to buy the dip. Technical traders can have all sorts of reasons for buying and selling and if you don’t like one reason there’s plenty more where to be found.
From a valuation viewpoint the markets look to be fairly valued and not much has changed as earnings for the quarter are being reported in line with the upper and lower expectations. Though revisions for the second quarter are falling, this seems to be the standard M.O. for public companies- “Report, revise guidance lower, then beat. Repeat every 90 days.” As earnings season is winding down there’s still cause for angst.
3 reasons we’re making market headlines.
- China’s reaction to new tariffs
- North Korea’s missile launches
- Iran’s feeling the python like pressure on oil exports
The markets have been patient waiting for these issues to be resolved. But somewhere in the future patience may be lost and the optimism of the crowds will give way to falling confidence and falling prices.
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