DJIM #18 2011

Coming into earnings season, we noted investors need see and find ‘value’ in stocks to keep the market rolling along.  This was essential as there were enough headwinds to knock the sails out of the market. (Japan impact questions/ escalating price of crude/ rehashed sovereign debt / Washington/ SP downgrade/ GDP lowered outlooks off eco data ).

All the above ammunition for the Bears proved futile as earning season has been a success, plus corporations were busy with M&A/ buybacks/Dividends to give investors more reason to find ‘value’ in owning stocks.  The ‘80%’ of surprise beats premise laid out here before this impressive peak earnings week led by industrials has exceeded this threshold in the most of the critical sectors, even in tech despite a handful of blow ups by mega caps.  The ‘top-line’ trends in cyclicals has been very strong and was an unforeseen surprise following crude/Japan impact.  Thus, any weakness in Global PMI’s may be somewhat offset by the strong earnings season.  Also, recent Shanghai weakness attributed to potentially more tightening may now be relieved following China PMI’s.

As far as the trading week, we outlined the shift back to macro from micro  in last Journal.  The outlier in the market for DJIM' is the pick up in mid-small cap earrnings   As we saw on Friday, while the market digests recent newsflow, we’ll have earning linked stocks to trade if the last few days are any indication….ACOM N ARBA QLIK  on the heels of  SFLY FTNT  from Thursday.

Still, let’s not fool ourselves, the FED/USD continues to play the pivotal role for investors risk appetite.  Broad market eyes will likely be glued on the USD.  The market is likely to be back to the days where USD moves dictate the equity price action at these SP elevated levels.

Update on Monday, May 2, 2011 at 05:20AM by Demi/ YourPersonalTrader

Re: Friday Update ....Netsuite is best, N, headline is nothing # special, but inside is great 'billings growth'and definitely an add to Shadowlist.

Barron's article on this point.

Netsuit(ticker: N), a provider over the Web of enterprise software as a service, known as SaaS, reported solid quarterly earnings last week. But the company's decision to cut its profit outlook for the full year by a few cents a share grabbed the biggest headlines.

The slumping dollar is to blame for the damped profit outlook. Roughly half of NetSuite's workforce is based overseas and paid in foreign currency, so a weak dollar eats into the company's profits.

But that really isn't the story. NetSuite is finally starting to grab traction as it begins to attract more customers. The San Mateo, Calif.-based company is winning bigger customers and charging them higher prices, which shows that its business model is starting to work after several years of investment. Billings, an important measurement of growth for SaaS companies, rose 30% for the quarter.