Can We Build On Yesterday's Gains?

Morning News of Note:

• Gapping Up
  Gapping up on strong earnings/guidance: AVCI +54% (up in sympathy: SCMR +4.1%), AAPL +13% (also Goldman upgrade), REDF +12%, SPWR +11% (up in sympathy: ESLR +2.4%), LOGI +10%, MOT +9.5% (also Piper upgrade; up in sympathy: RFMD +3.6%, IFO +5%), CHIC +9.3%, STLD +7.5%, BHE +7.5%, CY +7.5%, NDAQ +6.2%, EBAY +5.3%, ELNK +4.8%, AEHR +2.4%, IMCL +2.4%, SAP +2.2%, ALL +2%, PFE +1.9%... These strong Q2 results are driving much of the tech sector higher: SNDK +3.8% (Deutsche upgrade), STXN +3%, NTAP +2.8% (Goldman upgrade), GNSS +2.8%, EMC +2% (FBR upgrade), SUNW +2%, MRVL +1.8%, YHOO +1.6%, NVDA +1.5% (Deutsche upgrade), BRCM +1.5%, GOOG +1.2%... Other News: UN +2.8%, SBUX +2.2% (Citigroup upgrade), MWIV +1.9% (prices offering), AMTD +1.7% (in sympathy with ET report), TIE +1.6%... Under $3: NGRU +145%.
• Gapping Down
  Gapping down on disappointing earnings/guidance: MOGN -28% (also multiple downgrades), OPWV -12% (also Kaufman downgrade), CTXS -7.1%, BTU -4.9% (down in sympathy: ACI -3.5%), TER -3.9%, LRCX -3.3%, TZOO -3.1%, INTC -2.5% (down in sympathy: DELL -1%), ISIL -1.9%, CAL -1.5%, QCOM -1.2%... Other News: KNOT -10% (Merriman downgrade), BGO -5.5%, UNF -2.9% (prices offering), AHT -2.4% (prices offering), XMSR -2.9% (UBS downgrade), SIRI -2.2% (UBS downgrade), NKTR -1.8%.
• QCOM Qualcomm: Color on quarter (36.73 )
  CIBC believes their long-term thesis on 3G is secure, but cautions that mixed signals may be ahead. Firm believes QCOM's chipset market share may be peaking as Samsung and LG continue to struggle against MOT and NOK.
• MNST Online recruitment activity declines in 24 of top 28 U.S. metro markets in June, according to Monster Local Employment Index (37.35 )
  According to the latest findings of the Monster (MNST) Local Employment Index, online job availability declined in 24 of the 28 top U.S. metropolitan areas during June, suggesting a slight easing in online recruitment activity across major U.S. metro areas at the start of Q3.
• Cramer's 'Mad Money' Recap - TheStreet.com
  On Wednesday's edition, Jim says he uses a four-point checklist to determine which industrial issues are worth buying and selling. He uses United Technologies (UTX) as an example. First, the co must be levered to BRIC (Brazil, Russia, India and China), he said. Because United Tech gets more than half of its revenue from outside the U.S., it gets a check. Second, the stock must be levered to bull markets. As United Tech is focused on defense, aerospace, infrastructure and commercial real estate growth worldwide, it gets a check on this point, too, Cramer said. The third point is that that co's outlook must be bright, which United Tech's is. Finally, the industrial should be buying back stock and United has an aggressive buyback in place.

Market Comments: The market opened on a soft note this morning, but could easily shake off this early weakness and close higher again today. That is how bull rallies sustain themselves, by opening weak and closing strong.

Of course, the SPX bumped right into its overhead 50-day yesterday (on rising volume), so it might not spike through this level on its first try. But I think it will be successful in recapturing this key average in the near-term.

The markets are still working off their oversold condition, so this rally has room to run before we get back to overbought levels. Moreover, negative sentiment is still off the charts high, and it will take more of a sustained rally to shake the bearish foundation of so many investors. My colleage at Street Insight has termed this the "negativity bubble".

Bond yields are lower again today, with the 10-year yield at 5.04%. The dollar is also weaker this morning, while oil is up slightly.

long UTX