The day for earnings was of interest to many with Apple disappointing on guidance, Microsoft beating the estimates, but moved lower on… guidance, and Yahoo missed by two cents. In the end tomorrow promises to be an interesting day for the NASDAQ. There are plenty of headlines relative to the earnings and you don’t need me to interpret them for you… the charts will show you investors reaction initially and then we see how they treat them going forward. I am not much for prognosticating on what the earnings mean, but I will say that the reaction to Apple may be overdone short term. I will watch to see how it unfolds. There are some similar reactions to the Microsoft news… start your watch list of things of interest and see how it all unfolds and what opportunities they present.
Exclusive of the above the following are some moves of note:
Dow Jones Industrial fell 1% on Tuesday as IBM earning pushed the index lower. IBM was off 5.9% and accounted for the biggest part of the decline for the down. United Technologies fell 7% contributing it’s share as well to the decline. The index is now back near the 17,885 level of support. Only four of the thirty stocks ended the day in the green. Downside anyone? Watching as this unfolds near term.
Russell 2000 Small Cap index was of 0.45%, but it is the last three days of drifting lower that is a concern. Back at the 1240 level of support and IWM is in position to test the $123.75 support. Movement in technology stocks is the challenges along with small banks. This is another one to watch the downside risk as it unfolds.
Ten-year treasury bond yields are back at 2.34%… some building disbelief in action by the Fed relative to hiking interest rates. TBT is testing support at $48.20 as well… another piece to watch as this all unfolds going forward. On the opposite side TLT is hitting the $119 resistance level. Watching how this unfolds going forward.
Energy broke lower on Monday and failed to bounce today. The concerns over supply is the issue. The earnings by the oil services stocks are being ignored as emotions are focused on the Iran deal, Saudi production and the destruction of the US supply side. Oil is holding the $50.60 level for now as this all unfolds. Short side continues to be the trend and the winning side of the trade.
Very little green on the screens today and that shows some fatigue… I mentioned the overbought signals technically and to manage the short term risk. It is in play with plenty of headlines and news to deal with short term. Today was a long travel day and we will keep it brief tonight… tomorrow is all about the response to the earnings posted after-hours. Investors are in no mood for surprises, and in some way they are pricing stocks for perfection. Take it one day at a time and manage your risk as we go forward.