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Friday
Apr162010

Expectation Game...


When a stock is expected to come out with good earnings, it better not disappoint.   Most earning seasons,  we have often seen that a stock trades up just prior to the earning announcement, but only to get a lousy reaction due to the "miss" of high expectation or what they call the "whisper #”.  For some stocks, such as GOOG, AAPL, AMZN.. they fall into the category of "need to beat the expectation" as they are the “Crème de la Crème’ of the stock market.


Maybe it has something to do with their fairly rich multiples and the fact these stocks always had wild moves post earnings in the past.    However, doesn't that game get a bit tiresome after these many years?   Come on, why can't people treat GOOG  just like any other tech stocks?.    Honestly, we don't really want to put much emphasis on GOOG's earning or reaction tonight because it can get into an endless debate.   Instead, we wanted to point out UPS, which guided much higher for the year as a barometer for health.   If anything, this gives us the impression that the increased business from UPS means Economic activity is more or less flourishing across the board.

Today's the second day market closed over SPX 1200,  little follow through, but same story in buying/ selling trends as on most days talked about here.  down >3% added more credence to what we’ve been alluding to regarding the commodity linked names & broad market.   

Since, many of our plays are getting close to the report time and according to our own trading rules, we'd let go most if not all of the position prior to the earning date.  This is hard to do in a recovery period as you’d expect most to do as well as previous Q, if not better.      When the play reports number/guidance that surpasses the most optimistic expectation, we can always get back in.  

So far we are only getting a small taste of what's to come for this earning period, but these are the best names reporting first and they ie.(INTC UPS JPM) set the stage or let’s call it a “high bar", so far to meet for names reporting later.   GOOG/ISRG  are proof tonight.   Already, we have broken through some major levels from this market.    We can't wait till next week as the bulk of EPS begins, even though we have some important names tomorrow for the broad market.