The immediate morning question was can the market build on the premarket pop and Global rebound occurring overnight. The problem premise here recently is that besides no conviction buying stepping up when we need it, we don’t have shorts laying out exposure in this recent melt up or on this downturn to 20ma to make a move sustainable higher. So following this idea, logical expectation was once again some short covering early followed by little or no buy conviction at all coming off the sidelines. Therefore, a short covering would only be short lived because there are not enough shorts in the market, no longs to buy, so the bounce would peter out. An hour into the trading day this was evident as SPX gains were erased, by close it was even more clear the premise once again worked itself out.
In all, not sure who won today!. The Bears should have closed the market lower if you look at JPM, ASML, ADTN earnings reactions (more on this below). On the other hand, Bulls didn’t get positive reactions off headline #’s which were solid, yet finished at par in the broad market with earnings supposedly disappointing. Screwy day as cautiousness towards earnings is still prevalent on investors minds, so they wait for more reports to make investing decisions. Today's results left it up in the air.
Shadowlist
■Momentum/ earnings/ winners of ’10 – , Yesterday it was noted the tech group needs some good news. All the market got was more mixed signals it seems. Solid beats and/or guides were ignored and fickle investors found ‘ softness’ somewhere within a report and/or during CCalls. (ADTN was up 5% premkt/ ASML). Earnings luckily started w/ RVBD pre-announcement, but ADTN/ASML (noted coming into trading day to watch) couldn’t built on the support for the group. Tech did get some short covering just as in TXN/SOX bump noted gain yesterday), but that was it as the Nasdaq, peak to trough dropped 28 intraday points midday.
Yesterday….“Still ,some pockets of life today in NVDA/ Networking/optical were not bad today as the well know names like ALU CIEN did alright …”. Some of the best tech strength was in these names today, (optical/networking) ALU >8%, CIEN >4% up , FNSR >3%, along with our closely followed Chinese internet linked names, SINA SOHU BIDU again 3-7% up.
■Financials - In respect to earnings, same goes with JPM as with tech reports. It seemed like a solid report for the financials, based on a headline Rev/EPS, but the underlying mortgage repurchase expenses up attracted the negativity and spread to peers.