Overheard On The Street
Here’s what they’re saying at mid-day:
Robin Griffiths, Chief Technical Analyst,
HSBC: “The Dow Jones is breaking out of its downtrend. The downtrend was
formed when it hit a peak of 11,700 in January. Ever since then, the Dow Jones
has been making a pattern of falling highs and lows, i.e., it’s not been in a
bull market. It’s the only American index to do that. Both the S&P and
Nasdaq, for all their volatility, actually remained in a uptrend, and they’re
still in it.
“The good news, therefore, is that even the dear, old-fashioned Dow is
breaking back up again. If you put in a line of falling highs from January,
we’ve just broken it. We’ve also now broken above the 200-day moving average,
which is almost a first requirement to being in an uptrend. This
increases the chances that not only will the Dow go up, but it will also take
out 11,700 and go through 12,000 by the year-end, which is on the runup to the
presidential election and his new brief honeymoon whoever he is.
“So this is exciting stuff. All of those doomers and gloomers that
wanted the great bear market and all that. The market says to hell with you
guys. America’s fine. We’re going up. Mr. Greenspan’s not going to kill
it.”
Ricky Harrington, Senior Vice President
and Technical Strategist, Wachovia Securities: “Short term, we’ve seen some
improvement in both the technical condition of the market and the manner in
which the market has reacted to news. Both of these situations can change
quickly, but we seem to be in a market where we’ve had a little better breadth
for the last few weeks and an increasing number of new highs and fewer new lows.
The market also seems to be responding to these earnings in a little more
favorable manner than a few weeks ago.
“I think this is likely to change later this month and into August, but
right now the market seems to be looking at better earnings prospects. Perhaps
last week’s employment number kind of cleared the decks as far as interest rate
hikes for a while. We have a PPI report on Friday and then the CPI report next
week which could very easily show an increase in inflation. It really looks like
the market would be anticipating that, but right now the market is moving up as
if those inflation reports are not going to be much of a factor.
“I think the upside is fairly limited. Right now good earnings and the
possibility of no interest rate hikes in the immediate future are pluses for the
market. That’s probably going to change as we go into August and September. So,
I would suggest that there is a ceiling on this market, if we look at the Dow,
somewhere between 10,800 and slightly above that area. It’s just still difficult
to get a handle on any new leadership right here.”