Wednesday, January 19, 2011

Apple Trades Higher, Recoups Losses From CEO Announcement

The market is trading lower in early trading, after a mixed batch of earnings reports and a weaker than expected housing starts report.

Apple (AAPL) reported blowout earnings last night, and gave very strong guidance relative to its usual conservatism. The stock had already recouped most of its losses from yesterday, after it was reported that CEO Steve Jobs was taking another medical leave. After reporting earnings, the stock gapped higher again, and has traded back as high as Friday's closing price.

IBM also reported strong earnings last night, and the stock has rallied to new all-time highs today. In the financial sector, Goldman Sachs (GS) was a little light on the top line, while Wells Fargo (WFC), US Bancorp (USB) and State Street (STT) reported solid results. Nonetheless, all of the stocks are lower today. The financial sector is down -1.44% so far, more than the -0.67% pullback in the broader market.

Asian markets were higher overnight, while Europe is lower this morning. There are rumors that China's CPI report tonight will be below what has been expected.

The dollar is lower today, helping to boost most commodities. Gold is higher to $1376, while oil prices are down slightly near $91.00.

The 10-year yield is lower to 3.34%; and the volatility index is up +4% to 16.50.

Trading comment: Today looks like it could be the first down day in a while, but we have to see if the mid-day dip buyers come back once again. Regardless of waiting for the overall market to pull back, earnings season will present its own opportunities and volatility. So far, earnings season is off to a good start. The best buying opportunities remain trying to pick up those names that are growing earnings and raising estimates if you can get them on a pullback. Focus on the leaders, not the laggards.



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