We have had quite a lot of good news over the last 24hrs. As I had mentioned yesterday that we could get a pop on earnings coming from some of the good companies, but frankly I was not expecting such a big pop. Today after the close is Apple and generally expectations from Apple are very high. Here is a what I think were notable pieces of information
- Intel came out with a very big positive surprise in earnings. This was market moving because it really caught many people by surprise, since technology research companies like Gartner and IDC had lowered their PC shipment forecasts. Intel’s explanation is that the technology analysts are not properly accounting for emerging market demand. It not only beat this quarter’s numbers, the guidance for next quarter is also quite good. This bodes well for a lot of technology companies which feed of Intel and the PC supply chain. Typically Intel stock is unable to hold gains after good reports, but today so far it is holding pretty well, I think it is mainly because this report was truly a big surprise.
- Another piece of good news was the successful Spanish 10 year bond auction. This is a pretty good news because Spain is a large country and bailing out Spain would be pretty hard. That is probably one reason the Euro is quite strong against the dollar. Consequently a lot of the commodities are rallying due to the weaker dollar
- So far from the earnings releases, I gather that the financial sector is still performing poorly as they continue to be saddled with mortgage issues and poor loan demand from creditworthy customers. This actually does not bode very well for the domestic economy since you do need a healthy financial sector for a growing economy and it shows companies are still not finding great opportunities to invest in the US.
- We also had mildly positive housing data today morning and day before yesterday. Existing home sales were better than expected and housing starts were also better than expected. Nothing too good but indication of a housing market moving along the bottom, the positive one can take is that it is not again falling off a cliff.
Because of the big jump from the lows the short term trend has actually turned upwards. So far my prediction is that this will be a short lived pop and will turn down once we have some of these good reports out of the way over the next few days.