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Hewlett-Packard Computes Solid Results

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Top PC seller brought the market much needed good news.

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Lets face it, the market was under pressure out of the gate and it was a foregone conclusion the major indices would stumble, maybe get crushed. This prevailing view was in place before the biggest increase in producer prices since 1981 was posted and housing starts dipped to their lowest point in 17 years.

The good news is the market didn't crumble to the extent that it could have. Moreover, there wasn't any panic in the air as the session saw typical August volume. Still there is no denying the brief summer reprieve has run its course and there needs to be a refresher.

Right now I'm not sure what could spark the market but I think lowered expectations, particularly in the financials, could be low enough hurdles to spark rallies down the road. Today, we could get a boost from earnings released by Hewlett-Packard (HPQ) after the bell. The company saw its revenue increase 26% and earnings per share came in at $0.86, which beat the consensus by three cents. The company benefited from the weak dollar and balanced a dip in its printer business with a surge in ink sales.

Hewlett-Packard has been rocking for a long time so the news could be viewed as a company-specific event, but the market needs good news. Sure, I'd rather get a news alert from Fannie Mae (FNM) that all is well and it not only doesn't need funding but would raise its dividend. That's not going to happen, alas.

Another area to watch today will be crude oil. Yesterday crude began to move higher mostly as a function of stocks moving lower. One could take an educated guess that crude is ready for a trading bounce.

Yes, crude oil was up as speculators shifted into the space ahead of today's inventory data release. The niche to watch will be distillates. It's hard to imagine there will not be a big dip in gasoline inventory and crude should be flat to lower as well. Crude oil is building a base on the chart right at the same point it held back April. On the upside there are pockets of resistance up to $119.00/$120.00, a close above that level would be a meaningful breakout. Conversely, there isn't a lot of support below $112.00 until $100.00 a barrel. Imagine that, it didn't seem possible in early July, now many would argue it's inevitable.


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