Earnings season rolls on with today seeing IBM and EBAY both moving higher with decent earnings alongside on par guidance. The best earnings moves thus far are coming from the energy sector. Google (GOOG) is the latest to report today and is currently trading up over 3% to $612 after hours despite missing its revenue target.
If you are confused how the market can be performing in the bulls favor despite all the bad news and risk, you are not alone. Barry had a good piece today ranting then breaking things down a bit. Here is the opening rant,
U.S. retail sales fall for the three consecutive months. Chairman Bernanke disappoints the easy money crowd during his Congressional testimony. Weekly jobless claims come in much higher than expected. Companies miss big on the top line yet their stocks move higher. Sovereign yield curves in the European periphery moving toward inversion. Equities keep moving higher and higher. WTF?
Also Mark from MarketMontage shed some light on earnings and the positive reactions despite negative results,
The past 2 sessions we have had key reports from the likes of Intel (INTC), IBM (IBM), Qualcomm (QCOM) and the like. The theme is the same – there are warts but with lowered expectations these companies are doing enough to placate investors. Many of these names were diverging far worse than the market about a week ago when Cummins warned and took many global multinationals down. Again, on Wall Street the game is set a bar at X and beat it – and the market seems to reward it. Qualcomm even had an issue with guidance and is being rewarded so you just never know how the market will react. What we are seeing is a lot of misses on the revenue lines of these companies as revenue is impossible to play games with – whereas EPS is beating. Anyone who has worked in accounting for a public company, or analyzes these income statements quarter after quarter can see the all the levers that can be pulled to squeeze out an extra penny or three in EPS, especially with these huge conglomerates with operations globally.
Bottom line is "it's enough" in this market. Maybe in 2 weeks and/or at higher prices it would not be, but at this particular point it is.
Interesting times. No recap tomorrow as usual so have a fantastic Friday, a great weekend, and I will see you back here next week for more market recaps.
Here is a look at Amazon's (AMZN) cup and handle setup from my MarketSmith account. Pretty clean, MarketSmith has the formation drawn well. Buypoints would be at $230.60 and $234.10 with earnings due out next week. Click the image to enlarge.