Here is a list the points I think are relevant to the market right now.
- Both Dell and Cisco hurt the market psyche, which has no doubt been fragile, last week. Deere and Walmart did further damage on Tuesday. While I think it is clear that these four hurt the market it is interesting that none of the four have provided a lot of leadership to their respective sectors.
- This may speak to that fact that only a perfect (positive) storm was going to lift stocks in August after a very strong three month rally.
- The ten year treasury yield has come down a little but is still equity friendly. Unfortunately the outlook for 2006 is starting to deteriorate.
- The inflation data and industrial numbers were fairly neutral on the equity market and I expect that to be the case for the rest of the week. This is because there seems to be almost nothing that can derail the Fed off of its current path.
- Crude oil above $65 looks to be a problem for equities for now. I don't know if we can go back down to $60 but that kind of move would be a big positive for equities
- Hewlett Packard's news might be able to help the market tomorrow.
- Looking out to September; for as bad as August and September are to the market there have only been six time in the last 20 years that the market was down both months. So if this trend continues for August, selling pressure might exhaust for September.
- Having exposure to dividend paying stocks through this choppy market will help offset some of this down draft.
- I am am still optimistic for the next few months.