For the longest time, the earning season is usually kicked off with Alcoa announcing a miserable quarter. Today, we got quiet a surprise in AH as AA announced a profit with 9% sequential rev. growth. Remember the good ole EPS’s days, one thing we always looked for was SEQUENTIAL revenue / eps growth. Not YOY, but sequential! So, can this be real? You betcha! Although the profit of 8 cents/shr is largely due to aggressive cost cutting, FX, the top line Rev. figure is for real and China is the driver.
AA’s impressive Q may turn some skeptics on to believing a global recovery, therefore, real money would start to enter the market. A sentiment change is the key here, now all we need is for other companies to show they are 'rejuvenated' like AA.
After yesterday's market "rip", we'd expected some back pedalling from this market. What we didn't expect today is the lack of it as we traded in a very narrow range. Financials made it back to back to back >1% days ahead of their big earnings week indicating the street is optimistic. From the tech land, we had Google's CEO commenting that worst is behind us and he's seeing improvement in the Ad. area. This is simply great news as more advertising from business means more confidence from Corporate America. This directly translates that there's more consumer confidence and spending down the road, according to this logic. Yes, we are still range bound with SPX 1060-1064 as our short term resistance. However, if we get a decent IJC number tomorrow, SSS Retail #, we are sure to bust out of that resistance and who knows where we'll end up by the end of this week.
At DJIM land, even though we wanted to be unwinding positions, if we got a reversal last week, we still left the option to day trade selectively. Once again, our focus on the Holiday China was led by the only 2 stocks we introduced this/last week in DGW +$3/ 9% and TRIT +$2/14% .
We are also looking at quite a few commods due to the AA report. We wouldn't be hesitant to chase a few in pre. market or at open depending on the sentiment holding overnight.
Okay, so a positive start to EPS season...the question is how patieint the market will be before positioning money into other names. If the tone continues and it is definitely early, our premise of putting money into stocks for pre- eps moves will drive the overall market higher.