With the exception of GOOG, earnings reports so far this quarter have not been receiving the same joyous response that they received last quarter. Today, IBM and BAC sold off on their reports, and INTC, which had a great report on Tuesday night, sold off even more.
The interesting thing about this is that the market doesn't seem to care too much. The indices dipped a little today, but buyers were ready to jump in and we closed fairly well. They may be selling the stocks that are reporting earnings, but they are still buying other things.
We have more important reports to come next week, most notably AAPL on Monday and MSFT on Thursday, and it is going to be crucial to see if this "sell the news" behavior continues. At some point, that will spill over to the broad market. When stocks stop going up on good news, that is a major warning sign.
Technically, we continue to have amazingly strong momentum. The S&P500 bounced off the 50-day simple moving average back on Oct 5 and has gone almost straight up since then on mediocre volume. That is the perfect setup for a pullback, but we have yet to see much of one. The bears had a chance today, but the dip buyers came in this afternoon and reclaimed the momentum.
The biggest positive this market has going for it is the same thing that has been in place for months now: trust levels are low and most people just can't reconcile their views of the economy with the way the way the market is acting. How can the market not correct at least a little when the economy is undergoing a weak recovery at best? The answer is that too many people never embraced the rally and now they are struggling to catch up. What we need to continue to do is forget all the bearish fundamental arguments and respect the trend until is shows some real signs of ending.....
long AAPL
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