Like a Hot Knife Through Butter - 06/28/11

Dow 12,000 continues to show that it is neither strong resistance nor strong support. That's because we have cut through it so many times like a knife through butter. Interestingly Dow 10,000 was the same. We battled over that territory for almost an entire year between October 2009 and September 2010.

I'm sure we'd all like to think that the tussle with 12,000 is now over, yet there is still too much doom and gloom in the air to make that assumption. Gladly expectations are nice and low coming into the July earnings season. A strong showing there and we probably rise above 12,000 for a good stretch. Unfortunately that leaves far too much of the summer, and its natural pessimism, for us to feel comfortable just yet.

That is another way of saying, expect more of the same battle over 12,000 for the next couple months. Yet since I don't think we will go that much lower than there, a patient investor can snap up the values now and wait for a nice payday by year's end.

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

 

More from Steve....."Like a Hot Knife Through Butter - 06/28/11" at Zacks.com

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