We're all familiar with the above line from the Clash's
, and given the trends in the market over the last two weeks, this line has never been more applicable. For starters, over the last nine trading days, the DJIA (DIA) has had alternating closes of down, up, down, up, down, up, down, up, down. Then last week, the S&P 500 (SPY) was trading at overbought levels based on its trading range, but at the same time the 10-day A/D line was at extreme oversold levels. Very rarely do you see two short-term indicators showing two completely opposite readings on the market.
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In the earning's picture there is also a lot of indecision. While S&P 500 companies are handily beating EPS forecasts, broader measures of the earnings beat rate using the Russell 3000 are not nearly as robust. Along those same lines, we saw an interesting anomaly last week when we were looking at analyst revisions for individual stocks. It was not too long ago that the stocks of Apple (AAPL) and Goldman Sachs (GS) were considered bell-weathers for the market. But as of last week, AAPL had more positive analyst revisions than any other stock in the S&P 500, while GS had more negative revisions than any other stock! No matter where investors look these days, there is a whole lot of indecision out there.
(Click chart to expand)