Strike

Intel’s strong earnings on Thursday weren’t that big of a surprise given the fact that Windows 7 is now firmly in place.  After the bell, Intel beat sales & earnings expectations giving the stock a boost.  Barring some short-term pullbacks, this clears the way for higher prices for tech in general.  Windows 7 was released last fall and it’s beginning to trickle through tech land, just like low interest rates and stimulus trickled through the financial system.  Most businesses I know still use Windows XP and skipped Vista all together.  Vista looked different and acted different but was too unstable to run a business on.  In addition, many vendors of software that I used simply weren’t compatible with Vista.  Windows 7 is now Vista without all the bugs.  It’s more secure than XP and basically it’s just time to move on.  It’s becoming harder and harder to even find a new computer installed with Windows XP.  Businesses now have a reason to upgrade.  Microsoft was the bowling ball and some of the pins are Intel, Marvel Technologies, Sandisk, Applied Materials, Texas Instruments, etc.  I expect more strong earnings from these guys as well over the next few weeks.  IBM announces their earnings on the 19th and they should be excellent.  You can get fancy owning individual companies but I still like the ETFs in this space like IGM & XLK.

With strong tech results coming, stronger bank results would add even more life to this impressive bull market.  JP Morgan, Wells Fargo, Citigroup, Morgan Stanley, & US Bancorp all report over the next few days.  Strong results from the financial sector give investors that were hesitant another reason to buy.  As I see it right now, there’s simply no sellers.  Any bad news is being ignored and investors are focusing on low rates, an improving economy, and better news from companies.  I would caution those of you that are under invested and dying to get into this market.  I would be patient and average in because while the light is still very green to buy stocks, the short-term is getting a little overheated.  A lot of sectors and stocks are participating in this rally which is very bullish, but bull markets pause and breathe.  So, in the short-term, be guarded but this bull market isn’t done yet.

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2 Responses to “Strike”


  1. 1 Jon January 15, 2010 at 11:17 am

    Hi Karl,

    Good to read you posts. I am thinking the correction is finally here. Very overbought market and the DOW movements are very minor. Also we are seeing companies coming out with good earnings, consumer sentiment is up, industrial output up for 6 months straight, and oil prices dropping with no big market movements to the upside. As I write this today the market is down over 100 points, first big move in a while. I am planning to move to complete cash and wait for better conditions. Are you seeing the same or do you feel it will continue higher and this is just a consolidation period?

    Jon in Tampa

    • 2 keggerss January 15, 2010 at 4:57 pm

      Jon,

      I think this is just a minor correction in a still uptrending market. With that said, a 5% correction can still mean individual stocks/ETFs can fall much more than that. But, in the big picture, I don’t think this bull market is finished.


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