Change text size

• Email This Article
• Print This Article
• Subscribe

EARLY TRADE

Some headline beats and further confirmation of Thursday's new and improved outlook on the economy are being countered by a bit of schnitzeling, fresh concerns, and investor moderation off a brand new top. As of 10:32 ET the S&P500 ($SPX) and NASDAQ Composite ($COMPQ) are currently bobbing above water and up .21% on lighter trade.

Oh what a relief it is? Wednesday afternoon the consensus opinion interpreted a somewhat tweaked version of the FOMC policy statement to signal a Buy, Buy, Buy! for any and all things equity-related. New verbiage such as improved and should moderate further was cheered on with institutional quality volume and fresh highs for both the S&P500 and Dow Industrials. The bit about further rate hikes may yet be necessary apparently was lost on some. But not all folks of course, as it takes two to make a market.

One market barometer for investors risk appetite is saying, thanks, but no thanks. Internet behemoth Google (GOOG) blasted past quarterly earnings estimates (one more) by 27 cents in delivering results of 3.18 a share. Revenues of 2.23 billion also beat expectations. However, that figure essentially matched analysts estimates. More unfortunately, the stock was up 8.9% or 41 points for the month of January on rising expectations from investors. Hence, its of little surprise that the barometric pressure of the January Effect is falling during a chilly first day of February. GOOG is off 8.25 points at 493.31.

While reading is thought to be fundamental, Fed bulls do have one piece of anecdotal evidence with which to further cheer the current rate relief. The December core PCE deflator rose just .1%, as part of the income and spending report. The statistic is widely held as being the Feds favored price gauge. That being said, the benign reading comes on the heels of Novembers flat result, which is viewed as a positive trend and confirmation for the first, fore mentioned part of the Feds statement. 

Elsewhere, an unexpected slip to contraction levels of 47.5% versus estimates of 51.5% for the ISM Index is running contrary to the Feds recognition that growth has picked up. On the one hand, for rate bulls, the news could be embraced, if an economy back on track hip hooray of late could be forgotten. However, with some of those moderating price pressures the Fed spoke of, not exactly cooling off, call it a challenge to the current word or Herd on The Street. Per the prices paid component, inflation on that front ramped up 5.5% to 53% over the last month. With treasury yields lifting aggressively higher from action before the intraday release (up 4.84%), a more moderate take on the market is currently par for a still green, but bumpy course.  

Its a goog day for some investors outside of the major market barometers, but all told, February is ushering in more chilly evidence for the Q4 earnings season. Cable operator Comcast (CMCSA) posted higher profits and revenues on strong subscriber growth. However, a miss of 3 cents is sending the stock lower by 1.77 at 42.59. That also happens to be in the intended direction of a not-so-natural 3:2 stock split announced as part of todays investor bundle. Coffee purveyor is cooling off after percolating out-the-gate. The company reported in-line earnings and revenues on slightly stronger same store sales. Management also reaffirmed 2007 earnings guidance that includes revenue growth of 20%. However, an intraday decliner of 35 cents to 34.59 is saying anything but, Ill take that hot cup of Joe to go. And finally, Exxon Mobil (XOM) is tacking on 52 cents for a price fill up of 74.62. The energy giant beat earnings expectations by 18 cents with a figure of 1.69 a share. Year-Over-Year results though show an increase of just 4 cents. The company cited shrinking gas margins and lower natural gas prices as reasons behind its slowing earnings growth. 

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

Dick Green of Briefing, for one, is a bit concerned over the markets apparent embrace of the Fed statement, which he maintained as being bearish, if anything. His reasons are based on economic forecasting, an area which typically frustrates this corner. Nonetheless, as a trader that does read his thoughts daily, his view does act as confirmation for this market observer wanting to don the bear goggles once more.

Readers familiar with this column will know that with longer-term cycles weighing in and sentiment thats quickly moved back up to the watch your back levels of caution, that this hedge hog is currently focused on locating contra-trend bull traps. Beginning with some 3-D vision courtesy of the 34, 89-minute and daily that risk can be qualified much easier than any initiations of upside extensions and managed with stops of the fractional variety. For those looking for a bit of statistical confirmation, I can offer the following. For the short-term oriented traders, which seems like most of Wall Street these days, when equities and treasuries rally off a FOMC announcement, the more statistically robust trade has been to work the short delta. Thanks to sentimentrader.com for that factoid. 

• Email This Article
• Print This Article
• Subscribe

Recent Articles by Chris Tyler, Optionetics.com

• July 30, 2010
  Midday Action: July 30
• July 30, 2010
  Hot Shots, July 30: Straddling a Breakout Performance from Within
• July 29, 2010
  Midday Action: July 29
• July 28, 2010
  Growth Stock Swing Option: July 28, 2010
• July 28, 2010
  Midday Action: July 28