By Dave Fry, founder and publisher of
January 12, 2010
It's always ironic when you write a piece suggesting that something dramatic was needed to knock bulls down you get something odd like Alcoa that does the trick. Why odd? Alcoa always has complex earnings results that defy dissection. The bottom line is the street didn't like the results, and with markets much overbought it doesn't take much sometimes to cause reversals. Add-in China's decision to restrict lending to curb speculation and inflation (Gasp! I thought there wasn't any) and this made matters worse.
Tuesday wasn't a disaster unless you were in the commodity pits and long as things turned around significantly.
In this latest bull-run volume always picks-up on down days and Tuesday was no exception. Breadth was as negative as you'd expect with WSJ details below:
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Tuesday wasn't a disaster clearly and bad news sometimes has a logical reaction not often seen lately. Clearly market PEs are historically high but bulls have made the bet that earnings will come through and this thinking is baked-into prices. When earnings fail to impress and other news is negative the combination causes a reversal.
Alcoa was the first to roll-out earnings and hundreds more will follow in short order. Many are looking forward to Thursday's Intel report and JP Morgan's on Friday.
Let's see what happens and you can follow our pithy comments on
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Dave Fry is founder and publisher of
, Dave's Daily blog and the best-selling book author of "Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management," published by Wiley Finance in 2008. A detailed bio is here: