Friday, April 15, 2011

Shoulda Rolled Over, But Didn't

A ramp in crude oil and poor reactions to earnings from GOOG and BAC gave the market a good excuse to sell off, but buyers were unperturbed. Positive breadth was 2-to1 and most every major sector except banks were in the green.

Even after an intraday reversal on Thursday, we were still technically oversold today. That and option expirations were probably sufficient reasons for the market to hold up the way it did, despite the negative news flow. Watch out for early next week though; April can get rough after tax day - April 18th this year.

If we take a step back and look at the bigger picture, there is good reason to remain cautious, especially since the early responses to earnings reports have been so poor. We have a classic oversold bounce occurring and it is going to take some pretty good earnings news to turn it into another V-shaped bounce.

Next week brings hundreds of earnings reports, but probably the most important will be IBM, INTC and AAPL. IBM's report has often been a turning point in the market, and in view of the struggles of the semiconductor sector lately, it is hard to be overly optimistic.

Apple has been acting quite poorly for a while now but still isn't finding any major buying support. There are worries that its supply chain has issues due to Japan disruptions, but at some point the bottom-fishers are going to be looking for entries. I suspect a lot of buyers would like to jump in if the stock gaps down on its earnings report. I'd love to buy it in the 290s.....

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