ZACKS.COM: Dow 13,000 likely

oldpigwang

Dear Subscribers,

In the course of just two weeks we have rebounded ferociously and are now within spitting distance of the recent highs. What changed? Investor perspective.

In April expectations were running high for the economy and subsequently for stocks. Then May and early June economic data showed that the prior outlook was too rosy leading to an appropriate correction. But as often is the case, investors overshot the mark and became too pessimistic. Now, with much lowered expectations, the next round of economic reports looked much better. So with no recession in sight, stocks rebounded mightily.

The next hurdle is 2nd quarter earning seasons, which kicks off this week with Alcoa. The earnings estimate revisions into this earnings season were the weakest since the market bottomed in 2009. Meaning that expectations are nicely muted and should provide an easy target to hit, or better yet, exceed. If that is in the cards, then expect us to make new highs by late July, with a trip north of Dow 13,000 quite likely.

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research