Early this morning,
(INDEXSP:.INX) futures were down 6-7 handles but have rallied and
were up 4-6 handles as we headed into the open. While last week we
noted the most bearish action of the year so far, the indices
continue to hold above key support levels. The right side of the
range continues to build with pretty defined levels. Both the bulls
and bears can point to why their case is valid. Last night we saw
light PMI data from China's PMI, and then this morning we also got
somewhat lackluster PMI data from Europe, but their markets are in
the green. There is some talk that the age of austerity is ending,
which could be contributing to this morning's bounce.
Micro support stands at on the S&P stands at 1548 with more
important levels around 1536-1544. Resistance stands at 1565 then
1575. Yesterday the homebuilders (NYSEARCA:XHB) were one sector
that helped the did rally back after some softer data. Same sort of
things happened in transports, the
(INDEXRUSSELL:RUT), and financials. All this helped markets hold
The bio and pharma stocks seem to be leading the way with many big
moves in stocks like
) to name a few.
Tech continues to be mixed.
), which has been a very strong stock since its last earnings
release, delivered another blockbuster report and had some nice
after hours trading once it cleared $197ish. That is the line that
has to hold now as NFLX is up nearly 25% this morning.
(LNKD) also is best in breed and led the market along with NFLX
after last earnings season. This could see some new life above its
major pivot of $186-187.
(GOOG) had a wild ride yesterday but closed well. As long as it
stays above $795ish it could continue to be a focus.
(YHOO) acts well after last quarter's earnings and is worth a look
(MSFT) started to come on the radar over the last week, and despite
some manic action both look like they could be destined for higher
prices. Investors looking to park money in the market could be
attracted to the stable balance sheets and solid dividend yield.
They could use a rest before going again.
(AAPL) earnings are out after the close. I will take a small call
strategy just in case it gets halted, and then trade it after the
report. As should be the case whenever you take an options strategy
into earnings, I'm prepared that it could be $360 tomorrow and my
options go worthless. That's why I'm defining my risk with options.
Then I will trade it at that level if it goes the other way.
AAPL itself reports earnings Tues Apr 23 after the close and
expectations are pretty subdued (and seem to be falling every
hour). The St is modeling (as of Thurs 4/18): revs $42.485B, GMs
38.5%, OMs 29.6%, EPS 10.07, tax 26.19%, iPhone units ~35MM, iPad
~16-17MM, Mac ~4MM. For June, the St is modeling revs $38.907B, GMs
38.81%, OMs 29.31%, EPS 9.08 (nearly every preview says "we expect
AAPL to guide June below the St"). Many people increasingly think
AAPL could announce an updated capital return strategy in
conjunction w/earnings on Apr 23. In terms of anticipation, the 1)
base case expectations on capital: a dividend yield of at least
3.25% w/$7.5-10B of annual buybacks; 2) upside case on capital: a
dividend yield of ~4%+ and/or a large 1x "special" dividend
(similar to what MSFT did years ago) coupled w/an ongoing yield of
~3.75%+. Buyback pace of $10B+ annually; 3) downside case on
capital: a dividend yield of less than 3% and an unchanged
Metals are down a bit this morning as they've tried to bounce off
last week's lows but remain broken. Gold (NYSEARCA:GLD) has some
support at $137ish and has some micro resistance at $138.26.