Monday, May 5, 2008
ISM CONFIRMS WEEKEND THESIS
On Saturday we wrote: "Be careful: with energy prices at all time highs, the prices paid component won't come in light and if it does come in north of 72, the bears will wake up and put out many camp fires. We urge caution at 10 ET after the ISM is released. The market will be VERY BORING from 7:30 ET to 10 ET in anticipation of the data. Our readers would be wise to sell ahead of this data, as you have a window of 1 1/2 hours after market open. POTC sees the market selling off after the talking heads begin throwing around the ugly word INFLATION due to the likely rise in the prices paid component." Update Monday after the ISM data: Although the service sector showed expansion, at 52.8, the prices paid component rose from 70.8 to 72.1. POTC does see this number as troubling in the short run, and the inflation hawks have in fact begun to circle the bull wagon. As predicted in our Saturday piece, a number "north of 72" favored the bears, and the market has in fact sold off. With no economic or earning data slated until CSCO, after the close Tuesday, we favor a bearish trade. Please read "Psychology in the Upcoming Week's Economic & Earnings and Data" Have a great Monday, and remember, late Tuesday, but especially Wednesday will be much more bullish, as CSCO reports great numbers and guidance, and raises the universe of technology stocks. The CSCO tide comes in Tuesday after the close! The Psychology of the Call team.
Posted by The Call Team at 11:15 AM