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Nightmare on Wall Street

By Jeff Clark
Tuesday, September 12, 2006

Every horror movie has the same scene...
 
The babysitter hears a noise in the attic. She slowly walks upstairs to investigate the sound. She reaches for the light switch but it doesn’t work.
 
Is anybody there?” she calls out, but there’s no response.
 
She hears another noise coming from behind a stack of old boxes in the corner of the room. She inches forward to peer behind the boxes. And then...
 
A furry little kitten jumps out from behind.
 
The camera zooms in to a close up of the relieved babysitter holding the cuddly little feline in her arms. “You’re not so frightening.” She says to the kitten.
 
Of course you know what’s coming next...
 
As the babysitter turns to go back downstairs the slasher jumps out from behind the boxes and... well, you know the rest.
 
Right now on Wall Street investors are holding the furry little kitten in their arms.
 
The scary rumblings we were so afraid of as the correction started in May are all but forgotten. And, like the babysitter who starts making her way back downstairs, investors are convinced that there’s nothing to fear.
 
But be careful. Earnings season is about to jump out from behind the boxes and... well, you know the rest.
 
We all know that September is historically a bad month for stock prices. What we don’t know is WHY it’s such a bad month. I suspect it has something to do with the traditional summer rally lulling investors into a sense of complacency. But it probably has more to do with the third quarter earnings pre-announcement season.
 
In just three weeks, companies will close the books on the third quarter. So we’re shortly going to start hearing from companies that may fall short of analysts’ earnings expectations.
 
Given the increased interest rates, the relatively high oil prices throughout the quarter, and the recently reported spike in labor costs, we may hear a few more pre-announcements than usual.
 
At the very least, investors are likely to be a little more on edge about the upcoming earnings announcements. That edginess could prove to be the catalyst for another decline down to the 1,240 level on the S&P 500.
 
That’s my new downside target and I expect a decline to get started any day.
 
Best Regards & Good Trading,
 
Jeff Clark




Recent Articles
Market Notes
Oil service stocks taking a beating... Oil Service ETF at new low for 2006.
 
All things related to energy taking a hit... new lows for coal giants Arch Coal and Massey.
 
Gold stocks also tanking... Gold Bugs Index declines 7.5% yesterday.
 
In The News: Corporate insiders growing bullish.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%