Tuesday, October 20, 2009

Tech Soars on Earnings, then Sells Off

The trend lately has been for tech companies to rally into, and sometimes just after their earnings are reported, then they sell off. Intel, for example, blasted estimates and rallied hard, but since then it's traded down quite definitively. Same with IBM and RIMM, although their earnings were worse off. But it goes to show you, good or bad earnings, these stocks are peaking. Apple and Texas Instruments posted great earnings tonight, and it should lead to a solid Tech rally in the morning. But look at the charts above of the stocks I just named and then ask yourself if this "earnings euphoria" will last? Is it the start of new bull run? Without the big dogs in Tech carrying it higher, what's going to do it? Apple is going to make a significant new high tomorrow, but are they really that much better off? Now what?

I just want everyone to look deeper into the action here, and see that it's all fluff, smoke, mirrors, and window dressing. These stocks are being sold whether their earnings are good or bad. People are just dumping them. I'm getting the feeling that earnings will be the last "blow off like top" that will finish this rally.

Hang in there, the big daddy wave 3 or C is coming soon. And although it's been a very long hard painful battle for the bears, once the decline starts, the bears will be happy quickly. Until then, enjoy the circus around earnings and the cartwheels from financial managers on CNBC.


Gustavo said...

Example of buying the dip in blomberg today:

Fidelity’s Bolton Sees Stock Market Rally Continuing

By Saeromi Shin

Oct. 21 (Bloomberg) -- Fidelity International’s Anthony Bolton said it’s not too late to benefit from the rally in global stocks as he expects markets to keep advancing for a “considerable” time.

Low economic growth and low interest-rates worldwide are “good” for equities, and stock valuations are still “attractive,” according to documents handed to reporters before a speech by Bolton, president of investments at Fidelity, in Seoul today. Investor sentiment has moved to “optimistic” from “pessimistic,” according to the documents.

The MSCI World Index, a gauge of 23 developed countries, has soared 69 percent from this year’s low on March 9. The MSCI Emerging Markets Index, a benchmark for 22 developing nations, has more than doubled from its March 2 low. Developing nations make up all 10 of the world’s best performing markets this year, according to data compiled by Bloomberg. The Shanghai Composite Index has jumped 69 percent, ranking China 13th.

“I expect the Asian region including China to continue serving the role of growth engine for the world economy,” Bolton was quoted as saying in a Korean-language version of a press release from Fidelity. “For China’s market, there’s a possibility of a correction, but the long-term outlook is still bright.”

Bolton said on March 11 that the U.K. equity market was at or near its lowest point. The nation’s benchmark FTSE 100 Index, which tumbled 31 percent in 2008, bottomed on March 3 and has since rallied 49 percent. Bolton dumped his holdings of telecommunications stocks in the first quarter of 2000 at the height of the industry’s bull market.

Todd S said...

Great find, Gustavo! I really appreciate you finding these articles and sharing it with the blog.

Keep it up man!