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Earning season - looking on up at the bottom?

By Maxine Shapiro, KERA 90.1 business commentator

Dallas, TX – Don't look now, but the market is heading into its fourth day on the upside. Anything can happen by the close, but this more-than-noteworthy rally deserves some investigation. I'm Maxine Shapiro with Marketplace Middays.

As I was watching the market rally right out of the gate this morning, I was reading about an Associated Press poll. Quoting the AP wire: "People were asked if they had one thousand dollars to spend whether they thought it would be a good idea to invest in the stock market. The findings: only 29% said it was a good idea and 64% said it was a bad one." I had to grin. This was almost a perfect case for contrary opinion. There's a little tool that some traders in the futures market use. It's called Bullish Consensus. If 80% of traders are bearish, then a bullish view would be a contrary opinion and a signal for traders to buy. A few months ago, analysts were hoping for the bearish consensus to grow among investors. People would dump their stocks, doom and gloom would permeate, and then the market could rally.

Two analysts I saw interviewed today believe we've seen the bottom. How do they know? They don't, but they do get paid the big bucks to figure things out. One analyst supposes that since we did not go back into a recession and that the consensus of economists believes there will be no recession, the market was ripe for a rally. The other analyst pointed out that the time for corporations to reveal that they would not make their earnings estimates for the quarter has passed. The bad news ended last week.

So earning season begins fast and furious. Today, GM, Johnson and Johnson, Citigroup, and Bank of America all came in higher than expected. Wells Fargo and Bank One can be added to the list of institutions who showed higher profits from a year ago, thus proving the banking industry has weathered the storm. But earning season can be volatile. Prepare yourself. Tomorrow - IBM and Apple. Then on Thursday - Sprint, Microsoft, and some key economic figures for September.

So have we seen the bottom? A few are willing to say yes, but they all add, in these tense times if something unforeseen should occur - all bets are off. For KERA Marketplace Middays, I'm Maxine Shapiro.

Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to