False Rally in play, don't do it
1-24-08: To some, the recent rally on Wall St. might suggest the volatility is about over and things have stabilized. Yesterday, the DOW managed to close almost 300 points in the green after being down over 300. It was a nice rally indeed. This morning, the market appears to be extending the rally somewhat. However, we advise caution if you are thinking about jumping in now. In our view, this market is far from stabilized as we fear there is still a lot of negative news that will likely unfold. The picture will become clearer as more companies report their earnings in the next few weeks. Interestingly, companies that have recently reported are scaling down their projections suggesting the economy is on the ropes. For example, Apple (AAPL), the company beat their numbers handily, but the stock nosedive after issuing a lower guidance going into the next quarter. For those itching to get back into the market, we suggest exercising patience. The bottom has yet to be reached.
