Thursday, April 23, 2009

Prime Time For Earnings

Although things were looking shaky earlier this morning, buyers did a good job of pulling the market off their lows through the New York lunch hour, while some sideways action in the afternoon set us up for another wild ride into the close. The final hour was choppy, but the troops really got on their horse in the final 20 minutes, pushing the indices to their best levels of the day by the time the final bell rang.

A lot of that was likely influenced by some anticipation ahead of some earnings reports which are crossing the wires now (MSFT missed both top- and bottom-line estimates, but is $0.65 higher in after-hours trading, while AMZN is little lower after beating expectations but delivering cautious guidance), but with the big ramp-up in the financials at the end of the day, market players were also looking to position themselves in front of tomorrow’s bank stress test results.

Although the major indices didn't gain any traction on a good earnings report from AAPL, it was healthy action. We needed some consolidation and there wasn't any technical damage done.

We have a full slate of earnings tonight and there should be plenty of volatility. This is probably the most important night of earnings we have left this quarter; it is mostly smaller stocks in the next few weeks.

The good news is that expectations are generally pretty low. We have AMGN, AXP, KLAC, CAKE and many others. Amazon probably has the highest expectations of the group and holds the most danger, but it has been posting some strong reports in recent quarters.

Amazon earnings are hitting as I write and although they look nice, revenue guidance for next quarter is a bit weak. Some further profit-taking for the overall market would be healthy at this point so I'm not too worried about Amazon being bad news.

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