Educate Yourself - Is The Glass Half Full, Or Half Empty?

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Is The Glass Half Full, Or Half Empty?
by Charles B. Carlson, CFA
Dow Theory Forecasts

The market has been getting slapped around a bit in the last few weeks. Actually, such trading is somewhat understandable given that we are in the "earnings confession" season. That is the time of year, just before earnings are announced in earnest for the quarter, when companies come clean and say that earnings won't meet expectations.

Stocks can get worked over pretty good during this period, especially those that announce a disappointment. Indeed, IBM fell sharply following its announcement that first-quarter profits would not meet expectations.

What is making this confession season even more volatile is that it is occurring during a time of heightened tensions in the Middle East.

Thus, the market has several convenient reasons to move lower.

However, while the market has been beaten up a bit, I think it has provided a reasonably good showing. Indeed, the Dow Industrials have hung in there and are still holding the 10,000 level.

Thus, the Dow's performance in the face of a tough climate has been decent, which, in my world, means the glass is half full, not half empty.

If you are looking for a worst-case decline in the Dow Industrials, I think the 9800-9900 level should provide good support.

Bottom line: I think the worst of this decline is behind us. Investors should expect a more constructive market over the next few weeks.

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