Stocks were extremely quiet ahead of the Apple (AAPL) earnings report, and a Federal Reserve meeting Tuesday and Wednesday. Everyone expects status quo from the Fed but the market is so extended ahead of the release of comments, maybe some people are a bit cautious. It was very much like a holiday session with little volatility and volume. With no major catalysts the rest of the year we might see a lot of days like this. The indexes continue to hover at highs while they wait for some supporting moving averages to catch up from this parabolic 3 week run. The S&P 500 gained 0.13% while the NASDAQ fell 0.08%. There were two economic reports on the day, both completely ignored by the market as it's in a QE induced stupor:
Industrial production rose 0.6 percent in September, logging its largest increase in seven months. Economists polled by Reuters had expected industrial output would rise 0.4 percent. Meanwhile, pending home sales fell 5.6 percent to 101.6 in September, according to the National Association of Realtors, logging the fourth-monthly decline. Economists surveyed by Reuters had expected a slightly increase.
Nothing new to report on the indexes - the NASDAQ is being constrained by this year long trendline while the S&P 500 is above this recent trendline connecting highs.
After the bell Apple (AAPL) reported earnings and after an initial 3% drop in the stock has recovered to near flat as we type this.
Apple Inc's profit and margins slid despite selling a solid 33.8 million iPhones in its September quarter. Wall Street had hoped for a stronger beat on quarterly sales after the company predicted in September that its revenue and margins would come in at the high end of its own forecasts. The world's most valuable tech company said on Monday it expected revenue of $55 billion to $58 billion for the current quarter, outpacing Wall Street's average forecast for about $55.65 billion. Gross profit margin for the fourth quarter was 37 percent, down from 40 percent a year ago as intense competition from the likes of Samsung Electronics took a toll. That was roughly level with analysts' average 36.9 percent forecast. Apple said it sold 33.8 million iPhones last quarter, roughly in line with analyst expectations for 33 million to 36 million.
Thought it would be a good time to circle back to momentum name Netflix (NFLX). Last Tuesday we wrote this:
Netflix is a name we have to highlight. It might not apply to this stock since it has so many followers but generally when you have a bar (candle) like you see today, called an outside reversal with a close at the low - it is VERY bearish short term. Now, we are in a quantitative easing market, and in this market it seems like some technical conditions don't matter since everyone is so hopped up on liquidity but in normal times this would call for extreme caution.
So far so good... Netflix has continued its downward momentum after that very ugly movement last Tuesday. You never quite know what to expect in a QE market as a lot of old rules seem to not work, but in this case thus far it has.
Let's look at some "boring" names today - the transportation stocks remain on fire. Look at something like FedEx (FDX) which is up TEN sessions in a row.
Meanwhile cigarette maker Lorillard (LO) is up NINE in a row and TWELVE of the past THIRTEEN. Not names you'd usually associate with momentum