Tech Hit As Earnings Season Continues To Disappoint.
FUNDAMENTALS
Markets were down yesterday as the earnings season continues to disappoint investors across the board, especially in the Tech sector. December PPI numbers released yesterday also showed a slight rise and along with a small rally in oil price, it is certainly not surprising to see more investors taking profits off the table. There is a saying in the chinese market for a phenomenal like this called, "Shaking The Board" and is a way of driving uncommitted investors off the markets before the rally continues for those determined enough to stay with it. Well, that's from a market that's still in its infancy anyways. :) Does this mean that we have just experienced a false rally? I don't think so. A slightly pull up in oil price and a slight rise in the volatile PPI is hardly surprising. We definitely need to see more convincing evidence than these. Apple released Q1 earnings yesterday, beating estimates by a mile, however, AAPL fell on a Q2 outlook that failed estimates, sparking a small sell off to close down by 2.21%. Apple, however, continues to be Cramer's no.2 tech choice of the year and I personally see AAPL going further on the mid term as long as the lawsuit against CISCO doesn't come in the way too much.
TECHNICALS
The Dow closed sideways yesterday as Nasdaq closed down significantly. As I have mentioned in yesterday's comments, I suspected that the Dow should be forming yet another step in its staircase formation within these couple of days and yes, we saw it begin yesterday as it closed marginally lower. I see a testing of the 12500 level before rising yet to another high. Upside momentum continue to be strong in the Dow and with its strong 30 days moving average support level rising along steadily, there is again no reason to say that this rally is over, yet. Nasdaq closed down by 0.74% yesterday, showing a definite lost of short term upside momentum in our indicators and a sharp turn down from a short term overbought position. This could be a slight pull back before going any higher as mid term indicators continue to point strongly to more upside. We saw the same behavior back in 17 October 2006 where after another 15 days of going sideways, Nasdaq staged a rally. Nasdaq seems to hit a psychological resistance level every 50 points or so and 2480 seems like one of these. Unlike Cramer, I would still say that the Tech is still a buy until we see definite evidence of the end of its rally. Oil staged a small rally yesterday but not without making a new intraday low. This showed that bearishness still persists in oil and that it is most likely a false rally.
Markets were down yesterday as the earnings season continues to disappoint investors across the board, especially in the Tech sector. December PPI numbers released yesterday also showed a slight rise and along with a small rally in oil price, it is certainly not surprising to see more investors taking profits off the table. There is a saying in the chinese market for a phenomenal like this called, "Shaking The Board" and is a way of driving uncommitted investors off the markets before the rally continues for those determined enough to stay with it. Well, that's from a market that's still in its infancy anyways. :) Does this mean that we have just experienced a false rally? I don't think so. A slightly pull up in oil price and a slight rise in the volatile PPI is hardly surprising. We definitely need to see more convincing evidence than these. Apple released Q1 earnings yesterday, beating estimates by a mile, however, AAPL fell on a Q2 outlook that failed estimates, sparking a small sell off to close down by 2.21%. Apple, however, continues to be Cramer's no.2 tech choice of the year and I personally see AAPL going further on the mid term as long as the lawsuit against CISCO doesn't come in the way too much.
TECHNICALS
The Dow closed sideways yesterday as Nasdaq closed down significantly. As I have mentioned in yesterday's comments, I suspected that the Dow should be forming yet another step in its staircase formation within these couple of days and yes, we saw it begin yesterday as it closed marginally lower. I see a testing of the 12500 level before rising yet to another high. Upside momentum continue to be strong in the Dow and with its strong 30 days moving average support level rising along steadily, there is again no reason to say that this rally is over, yet. Nasdaq closed down by 0.74% yesterday, showing a definite lost of short term upside momentum in our indicators and a sharp turn down from a short term overbought position. This could be a slight pull back before going any higher as mid term indicators continue to point strongly to more upside. We saw the same behavior back in 17 October 2006 where after another 15 days of going sideways, Nasdaq staged a rally. Nasdaq seems to hit a psychological resistance level every 50 points or so and 2480 seems like one of these. Unlike Cramer, I would still say that the Tech is still a buy until we see definite evidence of the end of its rally. Oil staged a small rally yesterday but not without making a new intraday low. This showed that bearishness still persists in oil and that it is most likely a false rally.
Labels: fundamental analysis, investment, share market, stock market, stocks, technical analysis
posted by Jason Ng at 6:54 PM
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