reform sucks...

..more on the headline risk at bottom...

For the most part, we've had a pretty good start to earning season so far.    What is becoming apparent lately though, is that not everyone can produce the kind of report INTC, UPS or AAPL can.  The ’best’ of the whole lot comes out first.  We've had some high hopes for some of the plays on our shadowlist, but results are not 'exceeding', the already lofty expectations. 

Case in point, CREE,  one of our favourite LED play came out with number that beat the expectation slightly.   However, it didn't meet the street whisper number and stock got sold off AMC/today.    This is understandable given the kind of rise it's enjoyed over the past few months.    What it means though, is that hopefully we'll get a tradable bottom from CREE in the coming weeks and get back in at a more reasonable price.    This can be applied to any other growth plays that somehow did not meet the street's high end expectation, but still came out with a decent report.    So far, we haven't seen any plays with decent volume that came out with a blowout report.    Granted, we are still early in the EPS parade and a lot of surprises are ahead of us over the next few weeks as the small -mid caps always report later.   We just have to watch out for one and not to let any slip under our nose.  In the meantime,  we look for a first day trade as in the noted TUP  off excellent earnings, even with gap it still had a $51L-54H intraday spread to profit from.

As far as sectors go, commodity sector  is the most interesting one to watch right now. (How long will the sell off last?).    Other than OIH, which seemed to trade more off valuation than perception these days, most other commodity sector are currently enjoying a downturn which we alluded to possibly beginning many days ago.  Many names are catching up to X.   FCX came out with a number that missed revenue and it weighted on the metal sector.   Steels /Iron ore linked stocks off another 2/3%.  We already know from the steel reports, notably AKS, which has gone hand in hand with X really got in wrong as far execution.  We’re not really anticipating earnings plays here at this point.  Our hope is we eventually get some positive ‘economic’ feed from anyone that reports, but the focus has clearly turned to the ramifications of China growth 'curbs'.

Bottom line, day to day earning reports may not be that inspiring to trade and it gives time to look at market health.  Today, any corporate reports were overshadowed by events in Washington.  It will be hard (today showed ) to breakout to fresh rally highs with this ‘growing’ overhang.  Despite some bounce and a flat close, the financials were feeling stressed out from this overhang headline risk.  The fear is ‘reform’ on bank earnings.  Why?.  Look at Health Care stocks guidance and what reform is doing to the numbers.