Wednesday, April 15, 2009

More On Psychology - Waiting On, And Playing The Expectations Game

We ended a choppy day of action with a sharp squeeze into the close. Hopes are obviously high that JPM is going to put out a good report tomorrow morning. We have been uptrending ever since JPM said it was profitable in the first two months of the year, and now is the day of reckoning.

Given what happened with GS, it is going to be very interesting to see how this market reacts. The expectations are not nearly as high as they were for GS, but the results are not likely to be as stellar either.

The late run in banks combined with some good news from AXP, strength in real estate and a late plug of GOOG on CNBC helped us to finish strong. Semiconductors were the big laggard today after the INTC report, and that kept the Nasdaq in the red. Google reports earnings tomorrow night, and that will help determine the short-term fate of technology.

Before the late surge, I was thinking the market was starting to look a bit tired, however it has been pretty clear lately that the bulls are doing a good job of squeezing us late in the day. They certainly did the job once again today, and that is going to keep the sellers on the sidelines.

We'll see what JPM brings us tomorrow morning, and then we can start focusing on Google. I, without fear, predict more choppy action and last-hour spikiness.

Going into more detail, the late rally helped stocks settle at basically session highs. A late surge of buying interest was accompanied by a spike in trading volume, which helped all three major indices finish at their session highs... The buying effort was largely focused on financial stocks. The sector reversed early weakness to trade with gains for the entire afternoon, but it wasn't until a surge in the final hour that financials were able to climb to their session high. Financials finished with a gain of 5.6% for the session... JPM was a primary leader in the move by financials. Interest in shares of JPM comes ahead of the company's first quarter earnings announcement, which takes place tomorrow morning... The move by financials helped spur buying in the broader market so that nine of the 10 sectors in the S&P 500 closed in the green... Technology was the only sector to finish with a loss. It closed 0.7% lower amid weakness in shares of large-cap tech stocks like INTC. Intel actually announced last evening better-than-expected first quarter earnings results and indicated during its conference call that a bottom has been reached in the personal computer market. Intel went on to say that the worst is behind them from an inventory and demand perspective... Traders' decision to sell such good news comes in contrast to the trends seen in recent weeks. Nonetheless, Intel's weakness bled into other semiconductor and large-cap tech stocks. As such, the Philadelphia Semiconductor Index fell 1.5%, while the Nasdaq 100 slipped 0.4%... While most large-cap tech stocks lagged, GOOG traded with strength ahead of its earnings announcement tomorrow evening. Google's strength helped lift the Nasdaq Composite out of negative territory in the final few minutes of trade, but Google's strength didn't prevent the Nasdaq from lagging its counterparts for the entire session... Economic data did little to move investors this session. March industrial production fell a more-than-expected 1.5%, while capacity utilization came in at 69.3%... Consumer prices for March slipped 0.1%, but core prices increased 0.2%. Economists expected a respective increase of 0.1% and an increase of 0.1%... The Fed released its Beige Book, which didn't contain any real surprises. Though five of 12 districts reported contraction slowed last month, the bigger message is that activity still contracted. Essentially, the report fit Fed Chairman Bernanke's recent pronouncement that there are tentative signs the decline in economic activity may be slowing.

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