Market Brief: Monday, July 26, 2010

This morning, we do find the short-term sentiment has changed.  We don’t have that bear-killing pessimism to lean on that we had three weeks ago.  Yet, it is not dangerous, by a long shot, but the rally has buffered that fear of three weeks ago.  We also have the NYSE McClellan Oscillator at an overbought level of +245, with its 21-day oscillator reading at +114, but even that is not necessarily something to sound the fire alarms.

On the other side of the coin we have had barn-burning earnings releases with 78% of all releases last week beating the earnings estimates of analysts.  Earnings are up 42% year-over-year, versus the 27% gain expected by the analysts.  But guess what?  The general response was a big fat zero, or worse.  The stock prices were lucky to stay even on the winning releases…and that psychologically is good, I guess.

Portfolio fine-tuning is about all we are doing.  The last six weeks have uncovered a few stocks in our portfolio that are not acting as if they deserve to remain in a growth portfolio.  If that is the case, we would say this week is a good time to do a little weeding out - fine-tuning for the future.

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Don Hays