The Morning Hammer: Apple Smashes Bears, Record Nasdaq Highs in Sight
Global markets are in a happy mood courtesy of Apple's (AAPL) better-than-expected earnings report, and Japan's signaling of more stimulus.
Apple is up ~$6.50 in the early going after beating analysts' earnings, revenue, and iPhone unit estimates, and offering strong forward guidance.
Meanwhile, just as traders thought Bank of Japan stimulus was priced in (based on yesterday's big rally in the yen), PM Shinzo Abe showed commitment to a $265 billion stimulus package.
That's pushing the yen back down, which is great for risk appetites.
SPX futures are slightly green, while NDX futures are up 0.7%.
If Apple generates some follow-through among other large-cap techs, we could see a new Nasdaq Composite all-time high above 5231.94.
And the NDX may finally exceed its March 2000 high of 4816.35.
Facebook (FB) reports after the close, and if it repeats another blowout, maybe we see those records fall by the weekend.
In related news, Twitter (TWTR) dropped another guidance stink bomb last night and is getting smashed up. Meanwhile, Fiat Chrysler raised its forecast, and Comcast (CMCSA) and GlaskoSmithKline beat.
Crude oil is down after the API showed a very small decline in crude oil inventories after the close yesterday. EIA data hits at 10:30 a.m. ET. Economists expect a 2 million barrel decline.
We also have durable goods, pending home sales, and of course, the FOMC rate decision.
Fed Funds futures show that traders are pricing in a mere 10% chance of a rate hike today.
The forward outlook will be key. I would pay close attention to see if the Fed eases up on its concerns over the Brexit, given that global economic data has been generally strong as of late.
Lately, I've been emphasizing that perception of the Fed, which impacts all financial markets, is incredibly volatile.
Ths is especially true this year.
2 months ago, traders were pricing in a 74% chance of a December rate hike. That number dropped to 10% chance after the Brexit.
Now those odds are back up to nearly 50%.
And we act like Tesla (TSLA) is volatile…
Now one thing I found really interesting yesterday was the action below the surface in biotech. IBB was red because of Gilead's (GILD) weak earnings report and big decline.
Yet XBI, which is much more diversified (GILD is 8% of IBB), was actually well in the green. So below the surface, biotech was strong (as was the Russell 2000) on an overall snoozer of the day.
So pay close attention to biotech — if it turns out to be a coiled spring, the bulls might party like it's 1999.
And 1999 was a good year!
100% FREE eBook
Learn powerful concepts from the $795 Trading the Pristine Method Course.