DJIM #43 2009

So far, this earning season is coming nothing short of expectation.   Sure, we still have many companies from SP500 that have yet to report, but many of the bigger V.I.P names have already done their showing.    What a showing it‘s been!   From technology companies such as GOOG, MSFT, AAPL, INTC   to retailer giant like AMZN, financial companies such as JPM, GS  and commodity names such as FCX  and AA.   Just about every one of these V.I.P’s has beaten the analysts' expectation in a marginal way, both bottom and top line and has allowed the market  to bang at SPX 1100.    So, as far as the earning reports are concerned, everything has hit the mark so far.

Ok, now lets talk about this market outside of the earnings.    Before the earning season started, we were hoping that this round of earning can give investors some extra optimism and perhaps give this SPX >1100 a a run for it’s money.    So far, we have been trying to break the 1100 wall off the back of great earnings of some of the best companies in America.   The result?   It isn't very successful.    Right now, we have to be mindful of the action that took place last couple of weeks.    Yes, we have been praising AAPL, we bolded AMZN’s  great numbers/ big price target increases to come before Friday’s giant squeeze and as of Friday morning MSFT's great earning has helped these individual share prices. Unfortunately, this isn't translating into overall market advances.   There is no sympathy plays or index action to go hand in hand.   This was evident Friday, we didn’t even come close to a battle at SPX ES 1100 due this fact and the fact the financials couldn’t put the back to back days of needed out performance as discussed.    The fact we closed the week down near the SPX 1080 acts as a little reminder that even meeting high expectations may not stop this market from having a pullback. But, as every time before it may not be happen at all or just not be severe.   We’ve stalled after clearing SPX 1090 two weeks ago, we’re leaning towards a general pullback from this market unless we clear ES1100.  A pullback we think may be the best thing for long term.     If we absolutely needed to have some positions in this market now, we'd not hesitate to find some big names to park some cash into.

This market has acted great despite a few things, including lack of action from the small cap side.  It’s surprisingly lagging,  but earnings are still ahead for this class of stocks.  In the meantime,  if we can get can get some nice points off AMZN or BIDU maybe or AAPL without having to worry about giving back 10% the next day, we'll take this opportunity.    Right now, the focus is still on the big names as the recovery theme carries the most significance with them. 

Bottom line, until the mid-small cap world starts to report, most of our attention will be focused on the bigger names or sector plays.  (Only small caps that come to mind off our list with excellent EPS last week were NEU  ATHR ).     We've had two important innings of earning season thus far and we have a few more innings to go.