Stocks reversed a strong move higher yesterday.
And while we haven’t been looking for a convincing rally to kick off
until we get some clarity on 2Q corporate earnings and outlooks for the
rest of the year, yesterday’s reversal was a perfect example of the
indecision and uncertainty plaguing investors.

We are well aware of the catalysts. Economic
growth has slowed, employment data has weakened, European debt issues
remain unresolved, Congress can’t get it together on debt either, and the
list could go on and on.

I’ve said it before, but the main thing supporting
stock prices is earnings. Despite all the concerns about slowing growth,
we have not seen any significant earnings warnings. And with earnings
season just a few weeks away (Alcoa (NYSE:AA) reports on
July 11), the window for warnings is closing.

The Fed didn’t say much that was helpful after the
latest FOMC meeting yesterday. The Fed acknowledged that "some of these
headwinds may be stronger and more persistent than we thought."

The Fed also left the door open for more
quantitative easing, saying that the Fed is "…prepared to take
additional action, obviously, if conditions warranted…" But we won’t
see QE3 unless economic data remains weak for another couple months, or
if there’s some kind of crisis, most likely coming from Europe’s debt
problems.

In fact, the Fed has a ready excuse to open the
liquidity spigots if Europe takes a turn for the worst. And almost right
on cue, ECB President Trichet said that debt issues are "…the most
serious threat to financial stability in the European Union."

He went on to say his risk indicator is flashing
red.

The International Energy Agency (IEA) has started
its own stimulus program. It will be releasing 60 million barrels of oil
from strategic reserves around the world in a bid to push oil prices down
by increasing supply.

Could this also be plan for certain countries to
raise some cash without raising eyebrows? Sure, why not. The U.S. will be
helping out by contributing 30 million barrels to the oil stimulus
program. At $90 a barrel, that’s $270 million.

The program will reportedly only last 60 days. But
that may be plenty of time to steamroll stubborn oil bulls (of which I am
one).

Oil prices are getting killed this morning. If
this move pushes crude prices to the mid-$80s, I recommend buying oil
stocks with both hands. This oil stimulus isn’t the same thing as
quantitative easing. You can’t just print more oil. Any depletion of oil
reserves will be replenished at some point, which would obviously push
oil prices higher.

The IEA’s move on oil makes it more difficult to
use oil prices as a sentiment indicator, though it does underline the
importance of oil prices. At least we still have Apple
(Nasdaq:AAPL)
. Apple is re-testing its $320 support level
today.

Clearly, it would border on insanity to short
Apple shares. But the action $320 can tell us of stocks in general will
rally, or fall further.

Whatever happens with Apple, investors should own
the companies who are supplying chips and other technology that feeds the
boom in wireless device sales. Given the current weakness, these stocks
are offering attractive entry points ahead of earnings.

Click
here to learn more about my top wireless stocks
, and
as always, feel free
to write me anytime at [email protected]

Published by Wyatt Investment Research at