Shifting Focus back to EPS'...
Since the GS news hit the wire, everyone is wondering about the ramifications and how this market will play it out. If the news came out at the end of the earning season, we'd have no doubt that people would reduce a lot more exposure than what we've witnessed during last two trading session. But, this is the earning season and we will be hit these next 2 weeks with the majority of SP/DOW reports for market participants to digest.
With or without GS noise, we still want to know what kind of shape this Economy is in. Therefore, we feel the market focus will be shift back onto earnings and eventually think the ‘high bar‘ set will unwind and deserving stocks will trade better than those that have followed the ' best' on Friday and Monday.
AMC, we had an old name ATHR release a not so bad report and very good guidance. This once again is from the tech land and the trend seems to be pretty clear up to this point. Big blue ‘IBM’ released a report/guidance that met the expectation, but not quite at the high bar tech INTC level and reaction is expected to be muted. Interestingly enough, we know coming into this earning period that not every company can be a shining star when it comes to their earning reports. Tomorrow, we have AAPL and one of our favourite CREE reporting and both will be a good tell for the respective sector. Honestly, we have to believe that both will blow away the estimates. STLD is one of the first steel makers to report earnings tonight and on surface it looks very good, but like ACI (which had excellent Guid’) it might not matter much as commodity linked names continued their X snowball today with the big 3 here, X CLF WLT all off -4% intraday. We also have some good industrial names in PH, ETN reporting BMO.
As far as technically,. Yesterday..”..watch 20ma levels intraday as next opp’..”. The market bounced twice here today for a buy opp’ as we closed 14 points higher from those levels. If you’re playing SPY/ ETF indicies…great, as short covering prevailed. If not, you probably didn’t see late buying hit individual stocks with authority. Due to this, we don’t think we’re out of the woods yet, most of the buying other than ETF’s was in defensive names with high beta names/secotrs still in some profit taking mode. We may have to back fill some more near term, we would have liked to test support at 1075 and than make it back through 20ma.
Bottom line, at this point, we simply have to leave GS's issue to GS and rest of financials to sort out. The collateral damage, if anything, should be contained and limited to those that are involved. We personally don't believe GS will be the catalyst to start a nasty downtrend for this market as speculated yesterday.