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EARLY TRADE

Mr. Softy is attempting to firm up, but elsewhere an early stab at a broader based bid has the bull back on its heels in the early going. As of 10:30 ET, the S&P500 ($SPX) and NASDAQ Composite ($COMPQ) are each off by -.22% to -.25% on serious mad money deliberations.

Microsoft (MSFT) is tacking on 50 cents in intraday activity. Considering the company reported a 28% slip in profits from the year-ago period, that’s nothing to sneeze at. Considering the stock is still enmeshed in a high-level consolidation after rallying nearly 45% since its June lows, others might certainly agree. For the bulls, which apparently there are still a few, Microsoft did beat analyst estimates by three cents in delivering earnings of 26 cents. Much of today’s action though comes courtesy of investors still pining over what the Vista rollout might hold for the company’s future revenues. According to Mac heads, the word on the street is, “what’s all the fuss about? Been there, done that already.” For Windows users, though, including myself, well, apparently we’re still saying, “God bless you Microsoft” nonetheless.

Elsewhere on the corporate front, fourth quarter reports continue to point at companies able to beat the lowball estimates set for the season. However, guidance continues to be mostly in-line for the majority, with lower revisions being the second most favorite comeback by management and upward guidance a distant third. For stocks in the latter two categories, reactions have continued to produce substantial moves. Two stocks illustrative of that action in today’s session are Harman (HAR) and MEMC (WFR).

The first, a maker of audio sound systems gapped lower and is trading off by 6.25 points at 95.60 after beating slightly, but reducing guidance. The second, a semiconductor / alt energy concern is up by an even more impressive 7 points at 50.66 after blasting estimates by 9 cents and guiding higher. Another commonality, both received bullish praise of sorts from this analyst. For its part WFR was outlined twice this week at investors.com on the new and improved options page. And while the detailed Collar is currently capping gains, adjustments and limited risk strategies always leave room for improvement and certainly improve one’s odds in a market gone mad.

The economic news of the day has investors opting for caution. Oil is up once more as visions or determined calls for $40-a-barrel oil are being further derailed. Black Gold futures are once more back above $55 and up close to 2% on the session. On the officially sanctioned front, two reports out this morning that suggest the economy is picking up steam, has Wall Street in tune those reports potential impact on interest rate policy. For its part, treasury yields are higher across-the-board with the 10-Year (4.87%) testing its highest levels in five-months. A durable goods release officially came in below expectations by .04% with a reading of 3.1%. However, November was revised upwards by .05%. Further, excluding the often volatile transportation component, non-defense goods came in one-tenth above November with a figure of 2.3%. An intraday release on new home sales also adds to the case of an economy rebounding from its 2006 trough. Today’s 4.8% jump to 1.120 million units (annually adjusted) usurped expectations calling for 1.050 million units and continues to more or (sometimes) less build the case for a stabilizing housing market.   

GROWTH & MOVERS COVERAGE

EARNINGS CALENDAR

Select reports scheduled after the market close and in the premarket:

REPORT CALENDAR

Economic releases scheduled for tomorrow:

INDICES & MARKET MOOD

“So many results, so little time” comes to mind in attempting to dissect the meaning behind an absolute plethora of reports. That said, I failed to mention investor reaction to the likes of Amgen (AMGN), Caterpillar (CAT), Stanley (SWK), Western Digital (WDC), Carpenter (CRS), Halliburton (HAL) and Honeywell (HON). But, that about covers it. Sorry for that inconvenient truth.

Elsewhere, market extremes and decisively bearish action from Thursday’s session have yet to be countered, in most market venues, as we enter the noon balloon. The observation from this corner remains ensconced in the bearish implications of longer-term cycle analysis. Overall sentiment (VIX, analyst opinion, Market Vane….) also continues to contradict that the bull is running on all fours at this time. However, when extremes are hit that contradict some of that concern, like they were three days back, taking in some deltas for a bounce is also embraced. That was readily apparent in commentary at that point in time. Currently, while those same lows are being tested, this market observer holds no such intentions as it relates to things like 50-Day / 78% bounces in the Naz’. Apparently, at least one statistician agrees with my own neutral approach at this juncture. That tidbit / factoid of caution, based on a reversal of multi-year highs in conjunction with the ratio of decliners over advancers, was touched upon in the latest Growth Stock report. For now, with a market filled with shrapnel from Thursday’s session, hedged and sufficiently happy until the directional edge emerges once more, sounds about right.

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.

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