Tuesday, April 14, 2009

Never show your best hand first

IE: Wells Fargo

After WFC pre-announced their "record earnings" on Thurs, did anyone really think the overall broad market could continue to match that kinda momentum?

I haven't dissected INTC's earnings here, but the articles i read seem mixed, actually most sound bullish. "intell beats the street, sales improving, etc". Again i have not read the entire report yet, but it doesn't "sound" that terrible?

that doesn't matter, what matters is the market's REACTION, and i see them down 5% in the A/H, that's what i see, and that's all that matters is the reaction.

What was the market expecting? something like WFC?

That's why ya don't show your best hand too early in the game, and i feel that WFC set the market up to fall here. There is NO ONE going to duplicate those kinda earnings like WFC and GS did. (yet see both of those today...they were trading on life support)

Yes, it's b/c they (well gs on record) is selling to pay back tarp. However they would not have this opportunity and entry to if they did not blow out earnings like they did. So both are part of the overall picture.

Of course WFC and GS both have other motives here and want to pay back tarp, etc etc. So they wanted to get this out there ASAP, and get the boost in the share price, so they can dilute to pay back TARP.

(which is another gamble either way, b/c i don't think its a "lock" they will be allowed to)
maybe they will, maybe they wont....no reason to speculate either. But to be cognisant of either of each, yes....one must be.

Now i do agree that its still too early to jump on any negative momentum of INTC, as we saw that Alcoa sure had an "initial" knee jerk down reaction after they missed, then went parabolic in the days after that. (of course that was helped by the overall market momentum too, but still to be respected none the less)

So on to INTC, and they very well might go UP tomorrow, like AA...who knows? (i don't)

But take a look at Financials here, they were the MOST down YTD, and the expectations were basically nothing. So they have so far BLOWN away the earnings, and got a huge pop (well till today)

Reason (along w/ the charts) i like the Nasdaq short here for the next couple weeks, is they are basically the OPPOSITE of the financials here. The expectations for these things is VERY high, and they are UP the most YTD.

Lower the bar really low, there are going to be some huge upside surprises (wfc, gs)

Raise the bar really high, there are going to be some "decent" earnings, that are still disappointments.

If INTC beat estimates and its down here (even if it's just for today). Then what's gonna happen when a big cult tech names flat out MISSES? Because it's going to happen, we don't know to whom, but it will for a few, and its gonna drag down the index big time. (whew, its gonna be ugly) b/c there is not much love here for those tech guys. The bar is TOO high, and some people look like they fell in love w/ the WFC report, like it was a sign of things to come for others. (i hope no one really thought that, b/c it was all the m2m changes on the "books") But it sure does look like here, that WFC set the bar too high too soon for the broad market.

Fundamentally, in this economy, i don't "THINK" intc even be should be down in the a/h by 5%. I don't.

Fundamentally, who cares? Only thing that matters is the markets reaction. And if they react negative to those earnings, (even if its only 4-5 in a/h)..they are going to likely react VERY negative to when someone like intc flat out misses, or lowers fwd guidance. *intell was soft on fwd guidance, but again i have no read the report totally, nor do i plan too, over-analyzing the valuations and fundamentals IMPAIRS profitable trading in my opinion, b/c all that matters is how the market reacts, and that's all* I have no idea what other big tech names are going to report, no one does.

But i feel pretty confident that overall INTC's numbers will not the that bad compared to many others.

So if the market is not showing them love here, again...whats it gonna do when a big tech misses? ......we shall very soon find that out.

and that's why ya don't flash your best hand in the 1st qtr of the game, but i guess WFC couldn't resist.

tech is likely in for some trouble here for next couple weeks.
(i said that yesterday though, via the charts) :o)

1 comment:

  1. great calls there kid..... lol.... I have a feeling I'm older than you, but not wiser... you nailed those spy puts.... I love your options plays.... love em.... thanks for dropping in.... I always check this blog out....