Tuesday, April 24, 2012

Stocks Attempt To Bounce In Early Trade

I think after yesterday's selloff I would prefer to see stocks open weak this morning and then rally into the close.  Stocks have opened strong, and if they can't maintain these early gains into the close it will not inspire much confidence.

Speaking of confidence, the April Consumer Confidence index eased to 69.2 from 70.2 the prior month, but the index is still at a fairly high level.

Housing data was mixed.  New home sales improved in March, but the Case-Shiller index fell -3.5% in February after falling -3.8% the prior month.

There has been a flurry of earnings reports out last night and this morning.  Reactions have been mixed. I don't see any huge gainers on earnings, and the one big disappointment I see is Netflix (NFLX).

Stocks rising on earnings reports:
Stocks falling on earnings reports:

Asian markets were mixed overnight.  Europe is higher this morning, bouncing back after yesterday's sharp losses.  An April consumer confidence poll in France rose to 88 from 87 the prior month.

The dollar is lower vs. the euro today, and that is helping the CRB commodity index gain 0.4%.  Oil prices are higher to $103.75 while gold prices have risen to $1646.  Gold hasnt' been able to get above that $1650 level in awhile.

The 10-year yield is getting a small bounce to 1.96%.  And the VIX is down 2% to 18.56 after spiking to the 20 level yesterday before reversing lower.

Trading comment:  All eyes will be on Apple (AAPL) tonight.  The stock is down again today on weak activation numbers out of T-mobile.  I feel like the big pullback from recent highs has lowered expectations sufficiently going into the earnings report that AAPL should trade okay following the report.  If the stock had continued to run ahead of the earnings report, I would be much more worried about a plunge on any disappointing numbers.  But at current levels I feel there is at least a little bit of a margin on safety in the stock given that it remains very cheap on a P/E and PEG basis.

KAM Advisors has long positions in AAPL, MMM, and UTX; short NFLX


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