All About Earnings

0 Comments Published July 2nd, 2009 in 4xGenie

Currency Investing

Well the second quarter has just come to an end and everyone on The Street is nervous to see what the consequences were. According to Bloomberg, stock prices in the second quarter had rebounded sharply from the previous quarter and stock indices were up the most for a quarter since 1998. Of course much of this has to do with the fact that the initially quarter was one of the worst for stocks in history, but let’s not ruin a excellent tale for the want of a few facts. Still the question ruins, will the market continue to rise?

In order to see if this market has legs and can continue, we must initially take look at what has been causing it to rise in the initially place. Quite frankly, the only things causing this market to go up are the hope and prayer that second quarter return aren’t going to be absolutely atrocious!

As Bob noted in a blog last week, there’s a excellent probability that there won’t be enough fiscal data this summer to send the markets significantly higher or lower. This is going to turn the focus back onto individual companies and their return. And the dreaded green shoots—will there be signs of life???

Here’s what the market needs to see out of corporate return in order to sustain these levels and go higher:

Companies need to grant somewhat positive guidance for Q3 and beyond.

Have corporate layoffs allowed companies to reduce their costs enough to start to return to profitability? Or is more job loss probable? Obviously, more jobs lost mean more difficulty for the economy in general, but this could allow companies to operate “leaner and meaner” to eke out profits.

The bar has been set very low for these companies so any misses in return will be seen as very bearish.

As you can see, there is a lot riding on this corporate return season and the outlook right now appears to be pretty bleak. If corporate return can show signs of life, and companies are beginning to turn it around, then this could stabilize the markets for the next push higher.

If, on the other hand, return come in worse than probable, then all the rhetoric and catch phrases for fiscal recovery won’t amount to anything. Should the latter occur, keep an eye on the US dough (UUP) and Japanese yen (FXY), as the flight to safety trade returns and currency investors pour out of the riskier currencies and return to the dough and yen. We’re by now seeing signs of it today with the poor Non-Farm payrolls numbers in the ahead of schedule session.

So return kick off next week with Alcoa (AA). Let’s hope that it gets started on a positive note, if not it could turn out to be a very long summer!

Mike Conlon
MyWealth Instructor
instructor@mywealth.com

Article Source:http://www.articlesbase.com/currency-trading-articles/all-in this area-return-1009221.html

Tags: foreign exchange rate, new zealand currency, japanese currency, mexican currency, comptroller of the currency, dubai currency, forex enterprise