Archive for April, 2010
Stocks Are Beating Lofty Expectations Keeping Profits Takers At Bay!
The market overcame early weakness yesterday and it closed near a 52-week high. Credit concerns in Greece, a dismal initial jobless claims number, lackluster earnings releases and the government’s financial reform bill dampened spirits early. As the day progressed, buyers stepped in. This morning, a solid round of earnings has the market trading higher again. Tech stocks are leading the way and businesses are spending money on IT. Microsoft and Western Digital posted very strong numbers. On the industrial side, Honeywell and Johnson Controls also beat estimates. One third of the S&P 500 companies have posted results. Over 70% of companies …
Regulation, Initial Claims and Greece Spoil The Party. Look For Selling This Afternoon!
This week, the market has digested a slew of earnings news. Major companies from every sector have posted results and in general, they have been excellent. Of the companies that have reported, 65% have exceeded revenue expectations and 80% have beaten earnings estimates. The guidance has also been good. This news was already priced into stocks and the market expected robust results. In October and January, the market rallied ahead of earnings season. Once the actual results were posted, stocks pulled back. We are seeing that same pattern unfold this quarter. The market hit its high just before the start of …
Lackluster Action During the Start of Earnings Season Is Unusual!
Earnings continue to exceed expectations, but the market has not had much of a reaction either way. Stocks are priced for great news and companies have delivered. In October and January, stocks sold off on the actual earnings announcement. After pulling back for a few weeks, buyers stepped in and the market resumed its rally. Normally, you can expect some fireworks during the first two weeks of earnings. There are surprises and the market whips around while it digests the news. The price action has been lackluster and traders are scratching their heads. Where will the next catalyst come from? Tomorrow, …
Quick Rebound Indicates Market Strength - Watch For Stocks That Sell Off After Great Earnings!
Typically, we see nice moves during the first two weeks of earnings season. This is when most of the surprises occur. Stocks in the various sectors react to early releases and guidance. So far, we have not seen much movement. Over two thirds of the companies have beaten revenue estimates and 80% of companies have beaten earnings expectations. Stocks are priced for good earnings and companies have delivered. However, they have not knocked the cover off of the ball. Last Friday, we finally saw some selling. In two short days, the market has been able to recover most of those losses. …
Expect A Sharp/Short Decline. This Is Not The “Big One”!
Let me start off this week’s comments with some straight-forward talk. I am long-term bearish, but I do not believe this decline is “the big one”. The upward momentum has been very strong and it will take major developments to topple this market. This decline is likely to find support and it will set up a short-term buying opportunity. The market decline resulted from an overbought condition. Bullish speculators needed to be flushed out. They have aggressively bought calls into earnings season and they have pushed stocks higher. Now that the results are being released, traders are “selling the news” and …