Thursday, April 19, 2012

Positive Reactions To Earnings Rolling In

The market was lower in early trading after some economic data came out that was less robust than expected.  But the positive reaction to earnings reports seems to be pulling things higher, and the markets quickly got back into positive territory.

In economic news, the Philly Fed Survey for April fell to 8.5 from 12.5 in the prior month.  Also, existing home sales fell to an annualized pace of 4.48 million units during March, but that is down from a pace of 4.60 million units last month.  Initial jobless claims for the week were also a little higher than expected.

In earnings news, we are getting into the thick of earnings seasons with lots and lots of companies reporting results. 

Stocks showing positive reactions to earnings:
Stocks showing negative reactions to earnings:
Overnight action in Asia was mixed, while Europe is mostly higher this morning.  The demand for the bond auctions in Spain was stronger than feared and the auctions were well bid. 

The weaker economic data is helping push yields lower, with the 10-year yield down to 1.96%.  And the VIX is lower by more than 3% so far, pushing it down to the 18 level and very near its 50-day average.

Trading comment: Earnings reports have been strong for the most part, and that will keep folks bullish about stocks.  The fears about deterioration in Europe are still present, although the solid bond auctions in Spain and France have pushed those concerns to the back burner for the moment.  But CDS prices in Germany continue to rise, so stresses remain.  I expect individual stock leaders to hold up well on a relative basis, but I do not think investors will escape the late spring and summer months without a pickup in volatility.

KAM Advisors has long positions in KMP, EMC, QCOM, UNH, and VZ


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