Nice Reversal Yesterday

Morning News of Note:

• Gapping Up
  BHE +11% (guides higher), INGR +10.5% (guides higher), MHL +15% (to be acquired by Deutsche Bank), VCG +6% (S&P 500 to add Windstream, which is merging with VCG), ACGY +6.2% (reports MayQ, beats by $0.12, guides higher), GENZ +4.2% (reports Q2, beats by $0.02), HITK +3.8% (reports AprQ, beats by $0.04), RAD +3.2% (mentioned on Mad Money), SOHU +3% (CIBC upgrade), USG +2.9% (CL King upgrade), SUNW +2.1%, AIR +1.5% (reports MayQ, beats by $0.01), SNDK +1.3% (Matrix upgrade; TWP positive comments), KTCC +1.1% (extends yesterday's 52% jump), NXG +2.1%, BGO +2.1%... India stocks are higher on strong INFY report and strong India stock market overnight: INFY +7.9% (reports JunQ, beats by $0.07, guides higher; up in sympathy: WIT +4.5%, SAY +4.2%, CTSH +3.5%), MT +3.4%, IFN +2.5%... Under $3: FCSE +21% (guides higher).
• Gapping Down
  SCUR -38% (guides sharply lower; announces acquisition; also multiple downgrades), BC -9.7% (guides lower), FAST -4.3% (reports Q2, misses by $0.02), DNA -3.4% (reports Q2, beats by $0.12, but Avastin sales disappoint; also downgrades from Deutsche and Prudential), ERICY -2.6%, ISRG -2.4% (profit taking after nearly 4 pt move yesterday), TEVA -2.3% (ends partnership with Japanese drug maker Eisai on Parkinson's drug Azilect), NTAP -2.4% (files 10-K, cautious comments from Kaufman), RMK -2.1% (guides below consensus), MNST -2% (may need to restate earnings due to options), STM -1.9% (Hynix ends talks with co on expanding chip alliance - Marketwatch.com), BOBJ -1.7% (extends recent slide), HAL -1.6% (US Army to end Halliburton deal -- Reuters), AZN -1.4%, GSK -1.2% (clinical data), BIIB -1.1% (DNA).
• GOOG Google: Not expecting upside to Q2 ests - RBC (424.56 )
  RBC says that while things are solid at GOOG, they remind investors that Q2 suffers from a seasonal fade in the U.S., even if third party data sources suggest otherwise. In Europe, unseasonably warm weather and the World Cup may have exacerbated the June fade, which is the weakest month of the year for paid search in the region. In addition, firm says the new deal with AOL may carry higher costs for GOOG. Firm says they are not expecting upside to their Q2 ests. Firm maintains their Outperform, but would urge patience heading into the results next week.
• EBAY eBay tgt cut to $32 from $42 at RBC (27.80 )
  RBC cuts their tgt on EBAY to $32 from $42 saying they have tweaked their 2007 estimates to reflect lower growth expectations, partially offset by contribution from advertising. The firm says there is clearly a strategy in place to diversify away from the core transactional operations. Further, the firm says the introduction of Google Checkout has materially impacted sentiment.
• DNA Genentech upgraded to Outperform from Market Perform at Berstein (84.06 ) -Update-
  Berstein upgrades DNA to Outperform from Market Perform saying investor reaction to the Q2 Avastin rev result is likely to be overdone and the weakness in the stock offers an attractive entrypoint to a stock likely to benefit from strong newsflow and top and bottom line growth in the second half of 2006

Market Comments: After yesterday's down open following the bombings in India, the market clawed its way back and finished in positive territory. Volume levels rose, making for an accumulation day.

The SPX drifted down to test support near its 20-day average, but the positive reversal helped it close back above its 50-day. This recent consolidation looks like it could be resolved on the upside. The positive showing for the semis yesterday was also a bullish development.

That said, the reaction by stocks to the early earnings reports so far have not been great. AA and DNA both sold off following their reports. But it is so early that I don't want to proclaim a trend yet. I have seen this before, and things can change quickly.

long GOOG, GS