Financials Review - July 12, 2010

The Financials Pitguru Review
For the week of July 12th, 2010

The next few weeks are pivotal for Wall St as earnings are set to make an impact on what direction the market goes. Tonight Alcoa (AA) will announce its earnings and is the stock that typically shows how earnings will go. There is a slow cautious feeling on the floor as traders wait for statistics. A question to ask is does the market trend upward the week before earnings season? The past few earnings seasons it seems as though a cushion was laid down like a shock absorber. The DOW jumped 5% last week and has shown resilience at the 10,000 level for a few months. However the DOW is still down 9% from the highs of last April.

A report was announced showing that 25.5% or 43.4 million people have a credit rating below 599. This might be the most frustrating time for mortgage brokers that have the business but no way of getting the loans to go through. This could be another sign of a weakening housing market. A credit score of 680 is helpful in many situations and may be the cut off point for many Americans.

It is wise to be cautious in earnings season especially for day traders. One needs to act short term but think long term. Questions to think about over the next few weeks for the long term: Is U.S. debt going to creep up and bite Americans like Greece or Spain? Could the housing market crumble again? How about the short term? Could earnings season point the market into a runaway bull? Could the U.S. bring confidence back to consumers? Look for correlations to try and predict future events. Obviously past results are not indicative of future results but it is nice to have a measurement when doing an analysis for the future.

By PitGuru Frank LaMantia