Don't Expect the Spanish Inquisition
By Rev Shark
RealMoney.com Contributor
4/15/2010 8:03 AM EDT
Life is like riding a bicycle. To keep your balance you must keep moving.
-- Albert Einstein
By any measure, the market action on Wednesday was extremely strong. The point gain was sizable, breadth was three-to-one positive, semiconductors led, and we even had a surge in volume.
One of the things that has been missing in this market has been technical follow-through, which is nothing more than a good-sized gain on increased volume. The theory is that the increased volume is an indication that institutional buyers are accumulating and, therefore, there is a higher likelihood of sustained momentum when the big players are active.
Since this rally started back in early February, the only other accumulation day for the Nasdaq was on Mar. 1. Neither the S&P500 nor DJIA have had any accumulation days, as defined by Investor's Business Daily, during this run. For a rally that has been as unrelenting as this one, it is a rather peculiar state of affairs, so it was interesting that we finally had a technically powerful day at such a late point.
The bearish spin on this is likely to be that this is a "blow-off" top. The theory is that the frustrated, underinvested bulls finally capitulated and started buying. They just couldn't take the pain of being left out any longer, so they rushed in. This is the mirror image of the capitulation that takes place after a downtrend, where market players can't stand the pain of losses any longer and they finally throw in the towel.
Theoretically, capitulation is supposed to signal a turning point, but it is rare at bottoms and even more rare at tops. The crash in 1987 is probably the best example of a capitulation low, while the bubble top in 1990 is a pretty good illustration of a capitulation top.
I bring up this up not because I think we have a top, but because it illustrates how bears can always find fault with the market. No matter what the environment might be, there are always compelling and logical bearish arguments, and even strong days like yesterday will be spun as a negative by those who don't trust this market.
The best way to approach this market is the same way I've been suggesting for some time, which is to stick with the trend until there is some clear reason not to. Without a doubt, we are very technically extended and ripe for profit taking, so it is important to keep time frames short and stops fairly tight, but it is a mistake to look for the market to suddenly collapse.
We have a huge number of earnings reports coming up and they won't all be as good as Intel's (INTC) , so we will probably have some bumps in the road, but there is going to be some very strong underlying support, and the dip buyers are likely to be very aggressive on any pullbacks.
The most disturbing thing about the action yesterday was the euphoria expressed by many bulls over this fantastic market. The market beast is often referred to as the Great Humiliator, and he will extract a toll from those who start to take him for granted. Try to keep your emotions on an even keel. It is very important to stay emotionally balanced when others are celebrating. We have our work cut out for us if we want to keep on profiting from this market.
We have some slight softness this morning, but the focus will soon shift to the earnings report from Google (GOOG) , which is out after the close. After the INTC report, expectations have probably ramped up even more and the risk of disappointment is higher.
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Briefing.com'ist:
Ülespoole avanevad:
In reaction to strong earnings/guidance: UPS +5.0% (also upgraded to Overweight from Neutral at Piper Jaffray and upgraded to Outperform from Market Perform at Raymond James), ATVI +3.4%, LSTR +3.2%, YUM +2.0%, SYT +1.9%, JBHT +1.5% (also upgraded to Outperform from Market Perform at FBR Capital).
M&A news: ME +38.6% (Mariner Energy to be acquired by Apache for 0.17043 of a share of Apache common stock and $7.80 in cash for each outstanding share of Mariner's common stock; values ME shares at $26.22/share).
Select oil/gas related names getting boost from ME/APA merger news: WTI +15.3%, PXP +4.5%, MMR +4.0%.
Other news: DVAX +24.1% (chronic kidney disease study confirms HEPLISAV's enhanced seroprotection against HBV infection), IDIX +23.8% (reports positive results with IDX184 from interim analysis of Ph. IIa hepatitis C study), CCRT +16.9% (announces "modified dutch auction" tender offer to purchase up to $100 mln outstanding 3.625% convertible senior notes due 2025 and shares of its common stock), CRDC +16.8% (reports first peer-reviewed publication validating Cardica's C-Port Systems efficacy), ANDS +14.9% (light volume; announces 72% of patients receiving ANA598 in phase II combination study with interferon and Ribavirin achieve undetectable levels of virus at week eight), XOMA +8.1% (receives $1 million milestone payment from Takeda Pharmaceutical), MIPI +7.6% (still checking), ABK +7.5% (continued momentum), IOC +5.8% (signs preliminary works joint venture agreement with Mitsui), MDVN +3.9% (Medivation and Astellas announce Publication in The Lancet of positive efficacy data from Phase 1-2 trial of MDV3100 in advanced prostate cancer patients), BALT +3.9% (Cramer makes positive comments on MadMoney), ERTS +2.3% (up in sympathy with ATVI), FDX +2.1% (trading higher in sympathy with UPS).
Analyst comments: ZION +5.1% (upgraded to Buy at Sun Trust Rbsn Humphrey), AMSC +3.2% (upgraded to Buy at Deutsche Bank), SOLR +1.8% (initiated with a Buy at Wunderlich; tgt $8).
Allapoole avanevad:
In reaction to disappointing earnings/guidance: TITN -10.2% (light volume), MGM -6.2% (announces it proposes to offer up to $ 750 mln in aggregate principal amount of convertible senior notes due 2015 in a private placement), MAC -4.4%, MTXX -1.7% (light volume).
M&A news: APA -3.5% (Mariner Energy to be acquired by Apache for 0.17043 of a share of Apache common stock and $7.80 in cash for each outstanding share of Mariner's common stock; values ME shares at $26.22/share).
Select financial related names showing weakness: NBG -4.0%, ING -2.3%, STD -2.1%, UBS -1.5%, RBS -1.1%.
Select metals/mining stocks trading lower: BBL -1.9%, RTP -1.8% (Rio Tinto bumps up iron ore guidance after strong Q1 - Reuters), GFI -1.5%, BHP -1.5%, MT -1.4%, VALE -1.0% (trading ex dividend), AU -1.0%.
Other news: SNTS -34.3% (confirms District Court ruling in Par litigation), REVU -10.7% (priced 14 mln shares at $3/share), HOTT -9.2% (trading ex dividend), NEP -7.5% (delays form 10-K filing and postpones release date of 2009 financial results), MAC -4.4% (announces 18.5 mln common share offering), NOG -4.1% (announces offering of 5 mln shares of common stock at $15/share), KRC -3.7% (announces commencement of public offering of 5.5 mln shares of common stock), BUD -2.4% (still checking), DAI -2.3% (trading ex dividend), MPW -1.7% (prices 26.0 mln common shares at $9.75/share), SAP -1.3% (still checking for anything specific).
Analyst comments: ARUN -3.1% (downgraded to Market Perform from Outperform at BMO Cap), HPY -1.7% (downgraded to Underperform from Market Perform at Wells Fargo), BWLD -1.4% (downgraded to Neutral from Buy at MKM Partners), NIHD -1.3% (downgraded to Neutral from Buy at Goldman), UNM -1.3% (downgraded to Market Perform from Outperform at Raymond James), GWW -1.0% (downgraded to Hold from Buy at BB&T Capital Mkts).
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Google prelim $6.76 vs $6.60 Thomson Reuters consensus; revs $5.06 bln vs $4.95 bln Thomson Reuters consensus
Esimese hooga 2.5% langust ja hetkel püsitakse 1.8% languses.
Esimese hooga 2.5% langust ja hetkel püsitakse 1.8% languses.