The market climbed slowly and steadily Thursday after again opening higher. Bank stocks were apparently pricing in calamitous earnings this quarter, and instead a few notable banks have been able to avert disaster with their reports. Goldman Sachs (GS) yesterday surpassed low expectations and the stock surged 7% after the open, and today Bank of America (BAC) revealed a $2 billion quarter due to sales of debt and its stake in a Chinese bank. BAC traded lower after opening sharply higher, but still closed the day up 2.4%.
Perhaps the market was quiet today in anticipation of a slew of major Nasdaq earnings announcements after the close. The headliner was Google (GOOG), which delivered a major disappointment. The tech giant missed EPS estimates by almost $1 ($9.50 vs $10.50 est.). A cynic would perhaps say the sharp, and unexplained, sell-off the first week of the year forecast a weak quarter from GOOG. At the end of 2011, GOOG looked to be setting up for a big run in 2012, but this report will force investors to reevaluate the growth model. Steve Jobs always advised Google executives to focus on five core components of their business first. The question now is, has GOOG become too big for its own good?
Google (GOOG) disappointed investors, but it appears to be a different story for two other tech giants that reported after the bell Thursday. International Business Machines (IBM) is more than 3% higher after beating on EPS but missing on revenues. Microsoft (MSFT) is more than 2% higher after also beating on EPS and falling just short on revenues.
Intuitive Surgical (ISRG) initially tracked higher after beating its earnings and revenue estimates handily, but then quickly fell sharply and is currently down 5%. Apparently the numbers weren't enough for the Street.
TECHNICAL TAKE
Markets tacked on some gains today with some help of various earnings reports. The S&P hit its high at 1315, just shy of my 1320-1340 first quarter target (even though we are still just in the third week of January). We are getting a bit overbought in my Oscillator, so having a hedge in this area makes sense.
Today was a typical day like we’ve seen in 2012 where you can find great plays at the right time.
Apple (AAPL) made historic highs. If you bought back on Tuesday like we mentioned, selling some above $430 makes sense. Earnings are on Tuesday. Much like GOOG's New Year sell-off may have forecast today's earnings miss, maybe Apple's recent strength is telling us a big quarter is coming. All data is pointing to monster iPhone sales in the fourth quarter.
Amazon.com (AMZN) has had a monster two-day move. Yesterday the AMZN $184-$185 trigger worked great, exceeding my short term expectations. I would take the trade here around $194. The next major area is around $202.
Cisco Systems (CSCO) has had a big move from my $19 pivot buy. I did sell some around here and am trailing some.
Netflix (NFLX) I've been riding this one since $75 with multiple actionable strategies in the last two weeks. I sold most today above $100. It does have room to $120, but don’t be a piggy!
F5 Networks (FFIV) continued higher after a big report last night, waking up the cloud space.
LinkedIn (LNKD) gave a nice trigger today at $71.50 and hit my $74ish first resistance target. Sold some and holding some.
The Homebuilders Index $HGX has had a monster run this year, and is now near one of the resistance zones that I put on the the map for the Mad Money segment. I would take some profits if you are in this impressive homebuilder move.
Oil Service ETF (OIH) I sent a note to add yesterday around $118.50 and it hit $123.50. I am holding it.
Caterpillar (CAT) has been very impressive, congrats to those who have it as macro longs from our December Morning Calls. It’s now a bit extended, so take caution.
Banks held in pretty well today after yesterday’s strength. I think you can buy dips there and wait for proper set ups.
Goldman Sachs (GS) has room all the way to $118 before it sees big resistance.
JP Morgan (JPM) failed at the 200day, but with time it should clear it.
Wynn Resorts (WYNN) was one of the best four-day strategies in a while. Last Friday it was buyable around $108, then a add through $112, and a nice sale today above $118. Now it needs some time.
Take trades and keep rotating through sectors, the indices are slow but stocks are moving.
*DISCLOSURES: Scott Redler is long SPY, OIH, XLF, AAPL, NFLX, CSCO, LNKD, RENN, CROX, WMT, VXX, GOOG calls and IBM puts. Short DIA.
