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The Bull-Bear Debate: Will Google Bum Out the Bulls?


An earnings avalanche hits Wall Street.

I'll tell ya, it ain't easy being green-and that's been the case since December 2011 when we offered the same exact vibe.

While some newbies in the 'Ville might mistake us for Pollyanna, the Old School in our midst would chuckle at that notion. If anything, we've been branded bears over the course of the last decade, which isn't such a bad thing considering it was the worst 10-year stretch in financial market history.

Be that as it may, looking back doesn't help much when trying to navigate a forward path. And while the Buzz & Banter (click here for a free week!) has recently been chock full of bullish bents-it's been more bullish than I've ever seen-Hoofy has been rewarded for his optimism...thus far.

Yesterday, on our real-time Buzz, I offered the following take:

Please take this in the manner intended, which is our collective best interest. When I see uniformity of opinion, regardless of how educated those opinions might be, I sit up and take notice, regardless if I do anything about it.

Yes, the tape acts great-it shrugged off the sovereign downgrades and gobbled up supply as fund managers relaxed the risk-parameters that handcuffed them into year-end-but few markets move in a straight line.

I'm not brave enough to draw a line in the sand and battle the animal spirits, but I'm nimble enough to make bets that have defined risk. As such, I've nibbled on some downside puts-one in the financial realm, another in a tech high-flier-with very tight parameters (I've set stops above today's (yesterday's) high prints).

Only time will tell if I'm rewarded for going the wrong way, but I would be remiss if I didn't share my stream of consciousness in real-time. Take it for what it's worth, which might not be much!

Fast-forward to this morning, as we digest the avalanche of earnings. The following analysis was shared by Minyanville editor Michael Comeau last night, in real-time.

Google (GOOG) is getting whacked after the company reported a fourth-quarter profit of $9.50 per share, which is well below analysts' expectations of $10.45 per share. Revenue was also light at $8.13 billion. This may be an issue of misplaced expectations rather than fundamental weakness, as positive chatter towards Google had become deafening headed into the quarter.

IBM (IBM) shareholders are in a better mood, however, after the IT giant beat analysts' earnings expectations with a quarterly profit of $4.71 per share. Revenue was a bit light at $29.5 billion, but the company's fiscal-2012 earning guidance of at least $14.85 per share is fractionally above expectations.

Intel (INTC) also beat expectations, though it should be noted that the company cut guidance on December 12 due to the impact of the Thailand floods on the PC supply chain. Nonetheless, the stock is seeing a bounce after hours as first-quarter revenue guidance is roughly in-line with consensus.

Microsoft (MSFT) is also getting bid up after earnings came in a hair above expectations, though revenue was in-line. This may be a counter-reaction to the company's recent warning of lousy fourth-quarter PC sales which raised fears among investors. Also, Microsoft revised its operating-expense guidance down for 2012, which is definitely good news for Microsoft bulls.

Conclusion: Three out of four aint bad, though it should be noted that NASDAQ (^IXIC) futures are weak after the close due to the impact of Google, and its spillover to Apple (AAPL), which is huge in the index. Pay close attention to commentary regarding Europe. Despite a large of volume of negative preannouncements heading into the current earnings season, a consensus seems to be forming among traders that the U.S. economy is holding together decently. Infosys (INFY) recently had bad things to say regarding European IT spending, so we could see confirmation/denial regarding such from these here four horsemen.

I will share that when I woke up this morning to find the NASDAQ futures flat (in the face of Google trading $50 lower), my first-blush reaction was, "If they're not going lower, they're going higher." There's no secret sauce to that formula-nor is it foolproof-but the reaction to news is always more important than the news itself.

We will monitor this dynamic in real-time on the Buzz, with a conscious nod that expiration influences will cloud the action on the opening (index options) and the close (individual options). Again, if you'd like access to the Buzz, 100% free - no credit card or anything, click here and you'll be up and running in under a minute.

Random Thoughts:
  • Did you know that it's impossible to lick your elbow?
  • Will Research in Motion (RIMM) let me back in and if it does, do I want to be there?
  • Given all the action these days seems to be on the opening and close, should we shorten the trading day to two hours?
  • Don't you feel silly for trying to lick your elbow?
  • If you're a card-carrying Minyan and would like to help us succeed, please pass around our offer for a FREE WEEK of the Buzz & Banter application (please click here for the promotion). Share it with anyone you feel would benefit from the insight and ideas the Buzz provides. We're a community and at the end of the day, we rely on you to help us do the voodoo that we do. Thanks so very much, and have a great day!

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
Position in AAPL, RIMM

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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