Ahead of the open, (11-01)
Wednesday, January 11, 2012 at 03:04AM Despite Alcoa kicking off earnings season with its first loss in a few years, plus JNPR, TIF lowering guidance, a Global melt up of ~1-2% in most markets ensued with no clear catalyst/news to most in premarket. In this view, our wary over China was lifted for the time being as its market put back to back gains equalling 5.6%. As traders, we look ahead for potential catalysts; in this case it was concerns easing over China. A 2.8% Shang’ rally on Monday says that, but was ignored by the markets on Monday. If you were watching China and see a substantial rally, you don’t miss the gap up on day 2 of rally. Today, China negative data brought back RRR cut ‘easing’ speculation (again)+ no ‘hard landing’ speak fueled risk sentiment, notably in commodities linked stocks overshadowing AA inline earnings.
On the earnings front,
“…into a highly negative pre-announcement (tech linked) season. The beginning was caught here in December and it escalated into 2012. The good thing is this is all priced into the tech market, so no shock and awe this reporting season in tech. If companies provide better guidance beyond March and for 2012 as a whole, they will be rewarded.” ..Into the trading, (Jan 9- )
JNPR, (not Shadowed here) finally succumbed to a pre-announcement as tech peers, but AH’s losses turning into gains suggests ‘priced in’ as speculated. Unfortunately, there is no bright visibility (guidance), yet.
In all, expectations may be reduced on earnings broadly, not just tech. This is a positive as analyst earnings are seemingly greater than co’s cuts allowing for ‘beat’ surprises and better than feared earning results= positive reactions on stock prices. Basically, ‘beats’ will be bought more than usual generating higher stock prices immediately following results and dips will be generally bought.
LULU, guided higher and spiked accordingly.