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MV Traffic Report: Market Caught in Gridlock


Rain or shine, we review the day's biggest stock stories.

Goldman Sachs (GS) was again the story of the day: The company reported mind-boggling EPS of $4.93, compared to estimates of $3.54, with revenues up 40% year over year, to $13.67 billion, compared to $10.66 billion. It looks like Ms. Whitney was right: This quarter was huge.

To give you an idea of just how huge, here are some startling numbers: Trading and principal investments were up 93% compared to the second quarter of 2008. Fixed income, currency, and commodities generated record revenues of $6.80 billion. Book value per common share increased by 8%, to $106.41.

Unfortunately for Goldman's shareholders, their day in the sun was yesterday. Today, the stock traded dry, hovering around the 150 level before closing at $149.66, down 0.15%.
The whole market actually traded dry today: The S&P was in a tight 10-point trading range, closing higher at 905, a 0.53% gain. Today's action was quite a surprise, since many participants were looking for market movement off the Goldman Sachs news.

Once again, we should have seen a slow day coming, especially with S&P perched at the all-important 900 level. Today on the Buzz and Banter, Professor Smita Sadana explained why.

"The market is at a very interesting juncture.

"If SP-500 turns back from the 900 area, in addition to the resistance-zone that the charts showed yesterday, it could be visiting the slanting neckline of a head and shoulders pattern, which is often a bearish move (pls refer to Buzz-note on July 1 for greater detail on head and shoulders pattern).

Click here to enlarge.

"While that's the scenario I am leaning toward, taking inspiration from Buzz Editor Terry Woo, there can be sometimes two ways to play; it's always a good idea to see both sides (lest you have to change sides).

"Here's the same chart with a bullish connotation. But the pattern will only be consummated if it breaks out on heavy volume. "

Click here to enlarge.

Tomorrow sets up another interesting day, as traders will be dealing with a barrage of economic data. Before the market opens, traders will see the CPI, Empire Manufacturing, Capacity Utilization and Industrial Production numbers. Then, at 2:00 p.m., traders will get to see the FOMC minutes from the prior Fed meeting.

Have a great night!
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No positions in stocks mentioned.

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