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Minyanville's T3 Morning Market Call: Market Takes Apple Earnings Miss in Stride


The market is shrugging off the surprising Apple earnings miss with futures set for a flat open.

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The market is shrugging off the surprising Apple (AAPL) earnings miss with futures set for a flat open. Media reports regarding efforts to solve a eurozone debt crisis continue to be conflicted, leaving the market a bit indecisive this morning. Yesterday the Guardian reported that France and Germany had come to an agreement over the aid package, but now there are reports that the sides still have issues to resolve.

Earnings season is in full swing, and so far it has been a very mixed bag. In tech, Google (GOOG) delivered one of the more impressive reports last week, and others like Intel (INTC) and VMware (VMW) jumped following strong earnings. It seems everyone was waiting for the new iPhone and held off buying last quarter because the company had a rare earnings miss. The stock is down more than 5%, but only back at levels seen just last week.

Bank earnings have also been lackluster, but it appears mediocrity is enough to help bounce the sector. Investors seemed to be pricing in catastrophic earnings, and despite missing expectations the likes of Goldman Sachs (GS) was able to bounce yesterday. Bank of America (BAC) was able to swing to a profit with one-time accounting boosts, but core earnings remained poor. Watch the financial sector to see whether this is just the latest bounce to get faded.

If not for weak AAPL earnings, it is likely the market would have been off to the races this morning. Monday's pullback came on extremely light volume, and after being down early the market reversed to rest move highs. Short-term traders will be watching AAPL, which will certainly be in play today. Many will look to see if they can buy it versus last night's support of $390-395 (which would be your stop-loss on the trade).

Can AAPL fill its gap, and will we start to see a new chapter for AAPL after losing its visionary CEO and missing earnings expectations? If the overnight gap gets filled within a few sessions, that will tell the me the market is giving it a pass. Overall its EPS still jumped 52% and revenue rose 39%, and the stock only has a PE less than 15. The stock is far from overvalued, and it is completely off the table to see the unwinding of a high multiple like Netflix (NFLX).

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