Today's Market Update with...

Harvey Katz, Value Line's Managing Editor

The stock market meandered about for a second day in a row yesterday as it eagerly awaited the start of earnings season. Yesterday was, indeed, the kickoff event, to use a football term, as some of the nation's largest corporations began the earnings parade.

For openers, Johnson & Johnson started the day's reporting with reasonably good income numbers. However, the day belonged to chipmaker Intel, as that semiconductor giant posted better-than-expected revenue and profit numbers after the close of trading and gave a bullish outlook for the fourth quarter.

That upbeat result and bullish forecast sent the equity futures soaring in the after hours and was a positive influence on the European bourses, which were strongly higher overnight following a ho-hum session in Asia. Now, the futures are rising strongly on our shores, presaging a solidly higher opening for not only Intel, but for the aggregate stock market. The Dow, which is on the threshold of 10,000 once again, could well go over that mark this morning.

That said, we caution that P/E's are getting frothy and the market is severely overbought. We aren't saying stocks cannot go higher, but the risks are clearly growing. At some point, the profit takers will come in and it may not be pretty when that happens. Stay tuned.