Latest Edition - Holiday period over

Cale McCulloch | January 6th, 2009

Wall Streets winning streak ended last night. The Dow closed down 82 points due to ongoing concerns about declining corporate profits. Although no one is expecting “good” results, I think it is more the reaction to those results that there is still some anxiousness about. Just how much is already priced in? Bad economic data continues to flow, but last weeks rally (on light volume) showed the extent to which this bad news has already been priced in. There is a saying “Buy the rumour, Sell the fact”.  Although, in today’s unusual environment this seems to be reversed.  Traders are selling stocks prior to the release of the results to the extent that they appear overdone. Then on the announcement (which may in fact be worse than expected), they are buying the stock. It is this mentality which is leading to the resilience of the market as negative data continues to flow.

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