Thursday, April 30, 2009

Profit Reports Trust Swine Flu, At Least For The Moment

The market is getting another strong bounce today, after another round of better than expected earnings reports. Many investors thought the market might take a breather yesterday after the FOMC announcement, but the buying pressure lightened momentarily but never really went away.

Most of the companies I follow exceeded profit expectations last night and this morning, and their stocks are higher. Consumer staples companies like PG and CL are the only examples I can find of stocks that beat estimates but are lower on the day. This looks like a move out of safety stocks and into the more aggressive names that are leading the market.

Case in point are the growth stocks like FSLR and GMCR. These two growth companies are not in the same industry (solar, and coffee makers), but they both have high growth rates, handily beat estimates, and their stocks are surging more than +20% today.

A couple of other standouts are ESRX and Visa (V), which also both beat estimates and are getting nice boosts in trading today. Growth stocks have really been leading this market lately, and the trend must be killing those funds that keep trying to short this market.

The WHO has raised its alert level for the swine flu, but that seems to be taking a back seat this morning to the positive string of earnings reports. The market also seems non-plussed by the pending Chrysler bankruptcy filing. Tech is leading the way, followed by retailers, despite the soft consumer spending figures reported.

Asian markets rallied strong overnight; the dollar is a bit lower, weighing on gold prices; oil is roughly flat; the 10-year yield is higher for a second day, after spiking up following the FOMC meeting yesterday. It is hitting new highs for the year at 3.15%; the VIX is another -4% lower to 34.64.

Trading comment: My cash is building up due to the small profit taking I have been doing on various positions, while having little opportunity (read: pullbacks) to put that money back to work. If I am feeling a sense of performance anxiety, I can only imagine how bad it must be for those managers who never embraced this recent rally.

I didn't pull the trigger yesterday on any new buys, and am still monitoring the names I have mentioned recently (RIMM, FCX, SLB, etc).

long ESRX, V; some clients long FSLR, PG


Post a Comment

<< Home