Q2 earnings: A catalyst or a catastrophe?

Market observations for the week of July 4 to July 9, 2010

Claymore Investments, Inc. 12 July, 2010 | 11:00PM

The major market indices finished the week solidly higher on optimism that the recent market weakness may have over-discounted the likelihood of a double-dip recession. Admittedly the recent economic data has been disappointing, although it appears to be more of a "soft patch" than a screeching halt in economic growth.

In addition, double-dip recessions are very rare. According to Strategas Research, once an expansion begins it is usually long-lasting, with the average expansionary phase (post World War II) lasting approximately 58 months. The recent data is a reminder that the road to recovery is never a straight line and speed bumps and potholes will be present along the way.

While it may be too early to call this a renewal of the bull market, the recent rebound has pushed the markets back above important resistance levels. With that said, we will continue to consider ourselves a "nervous" bull until the market moves back above the 200-day trend line (approximately 1111 for the S&P 500).

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Claymore Investments, Inc.

Claymore Investments, Inc.