Is the Market’s Mood Ring Purple or Black?
Kurt Brouwer July 31st, 2007
In a sense, the stock market is a giant mood ring. And now, it’s either purple or black [if you cannot remember your mood ring colors, here they are].
Corporate earnings are coming in better than expected. Yet, stocks are down again today after yesterday’s rally provided a little respite from last week’s downturn. As Tim Annett at WSJ’s MarketBeat Blog reports:
‘…According to Brown Brothers Harriman’s Brian Rauscher, second-quarter profits “in aggregate have been impressive considering the challenging operating backdrop.” With over 300 of the S&P 500 companies having reported, Mr. Rauscher says the ratio of upside surprises stands at 64.3%, “comfortably above the long term average of 54.7% since 1993.”…’
Collectively, the stock market’s mood right now seems to be moody at best or even a bit depressed. Upside earnings surprises are well ahead of the long-term average, consumer confidence hit a six-year high point, yet the S&P 500 actually falls over 1% for the day. The index was up for a while, but bad news on the mortgage front overcame any upward momentum from yesterday. Madlen Read, AP Business Writer, reported:
‘…Early in the session, stocks had soared following strong earnings from General Motors Corp. and Sun Microsystems Inc. and amid somewhat mixed economic data. But stocks pulled back after American Home Mortgage Investment Corp. said Tuesday afternoon it hasn’t been able to tap into its credit lines and has hired advisers to consider its options, including the sale of its assets. Wall Street has been concerned about credit after some loans made to borrowers with poor credit have gone bad, and that anxiety contributed to the market’s big plunge last week…’
We have had over four years of up markets, so it seems we need a little breather. I believe a breather or a pause or really a correction is healthy for the long haul as noted (here and here). A mood ring may be fun at a party, but as an investor it is better to take it off and let the kids play with it.
- Investing
- Comments(1)
Did you enjoy this article?
[…] Brouwer presents Is the Market’s Mood Ring Purple or Black? posted at Fundmastery Blog. Is the stock market a giant mood ring? If so, is it purple or black […]