Wednesday, April 21, 2010

Apple Knocks The Cover Off The Ball

The market is slightly higher in early trading, led by the Nasdaq on the heels of Apple's (AAPL) blowout earnings. The company crushed estimates on just about every metric, from earnings to Macs to iPods and especially iPhones. Apple sold more iPhones in the last quarter than they did during the previous holiday quarter. That was surprising. I covered the conference call for, and will try to post my comments later.

There was also a handful of other big companies to report solid earnings, pushing most of their stocks higher, including: VMWare (VMW), Morgan Stanley (MS), AT&T, United Tech (UTX), Boeing (BA), and McDonalds (MCD).

The dollar is slightly higher today. That is holding back stocks in the energy and materials sector, even as oil and gold prices inch higher. Oil is trading up near $84.40 and gold is also higher to $1143.

Asian markets were mostly higher overnight, led by China and Japan, while Hong Kong was lower; the 10-year yield is lower again to 3.75%, testing its 50-day support; and the VIX is up a bit to 16.15, after breaking back below the 16 level yesterday.

It's pretty surprising that the Nasdaq is still hovering around the 2500 level. It hit a high of 2517 last Thursday, so it is now less than 1% off its high. Ditto the S&P 500.

Trading comment: I'm happy that some of our positions are doing well today, but I am still a bit surprised that the market continues to hover near its highs. I still think complacency is too high here, and that a pullback is more likely than not. Yesterday, the Rydex ratio that I have shown here before hit a new 1-yr high, indicating that market timers continue to rush into the bullish Rydex funds and out of the bearish tilted funds. That's a yellow flag in my book.

long AAPL, VMW

*Note: Past performance is not indicative of future performance. Investing in securities involves risk, including the potential loss of principal invested. Investors should be aware that foreign investing involves special risks including grated economic, political, and currency fluctuation risks, which may be even greater in emerging markets. The price of commodities is subject to substantial price fluctuations of short periods of time and may be affected by unpredictable international monetary and political policies. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. However, an investor should note that diversification cannot assure a profit or protect against a loss. There is no assurance that these movements or trends can or will be duplicated in the near future.


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