Cafe Trieste in SF

Google Gets Whacked. Didn’t Plan for That – Oops

We’ll have to wait til tomorrow at about 10:30am to see if google’s “disappointing” numbers end up hurting this market but after hours investors appear to be pleased initially with Microsoft and Intel. Say what you want about Intel but they bought back 14B of stock and paid out 4.1B in dividends which is over 18B returned to shareholders. Impressive. Overall the initial reaction to this big earnings day looks positive but the 9:30am rush is not when I’ll make a final judgement. I’ll wait til the 10:30 second thoughts.

The bond replacements were flat and mixed with Walmart thrusting up – likely due to a chart breakout. The MLPs were slightly up and Altria was down due to some FDA scrutiny. Overall the safety trade is still dead as financials, home builders and other exciting stocks continued to move up and break out. Even though some technical indicators are giving “overbought” readings the market is still “worried” (Googles shoot first response to earnings a clue to that). Therefore there is a recipe for a continued march higher.

Gold was all over the place and the gold mining stocks were even messier. This is still a market trying to work itself out so anyone with a buy and hold or trying to time a move up in the gold sector might get a little annoyed for some time longer.

The outlook appears to still be positive with stocks bouncing off moving averages and creeping up. This could go on as long as we can avoid major news of the bad kind. Markets tend to keep going in a certain direction even if there is no news. So right now good news and no news will = markets up in my opinion. And as you may have noticed the most beaten down sectors are rising up quickly as some people think this may be a real rebound. If you’re trading, it makes sense to me to trade the most aggressive representation of what you’re trying to buy. For example, if you’re playing for a continued move, consider emerging markets or small stocks. With correlations so high you might as well get as much bang for your buck as possible.

My repeated advice to watch your risk management stands.

At the time of this writing, I or my clients own the following investments mentioned in this column: Gold, Altria

Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page

PS – Cafe Trieste photo added for fun. Check the place out!