Friday, January 15, 2010

Initial Earnings Reaction: Sell The News

The market is under fairly heavy selling pressure this morning, despite some very solid earnings reports from bellwether companies. Intel (INTC) reported a great quarter last night, but the stock had runup into the earnings announcement, and is being sold today. INTC is currently -2.0%, and weighing on the tech sector overall.

The bank sector is down the most this morning, despite another solid earnings report from JPMorgan (JPM). There were some things not to like in the earnings release, but the company beat profit expectations by a nice margin. I think many of the big financials are buys on this weakness, with BAC and GS being my favs.

In economic news, the December CPI figures were essentially in-line with estimates; capacity utilization ticked up a touch last month to 72.0%; and the Univ. of Michigan consumer sentiment survey also rose a touch from last month to 72.8.

The dollar is higher today, mostly on fears over the lingering problems with Greece's financial health. That is pushing the Euro lower, even as the Yen is firm. Nonetheless, the strength in the dollar is weighing on commodities. Gold prices are down to $1128 and oil is nearing the $78 mark. It's funny that since Gold made its highs back in December, I hardly hear anyone focusing on it on a daily basis.

Asian markets were mostly higher overnight; the 10-year yield is lower to 3.67%; and the VIX is up +6% to 18.65.

Trading comment: I think much of this early weakness has been related to today's options expiration. Despite the market being somewhat overbought at this junction, I am looking for spots to pick away at attractive stocks that I like. Yesterday we added to our GOOG positions, and there are many tech names that have pulled back as well.

long BAC, GS, GOOG