The Bull-Bear Debate: Will Google Bum Out the Bulls?
An earnings avalanche hits Wall Street.
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:
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.
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.
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- If you can't laugh at yourself, what's it all about?
- 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?
- American Idol viewership is down 17% from last year. Short sale of American Idols?
- 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!
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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 firstname.lastname@example.org.
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