Another gap down was bought today in a day with a range even tighter that the previous couple sessions. The S&P traded within a 6-handle range but again showed a bullish bias closing on the highs of the day and near the top of the range. This has been a very healthy pause in the market as the initial leaders (NFLX, CRM, VMW, PCLN) have absorbed some needed profit-taking. Apple (AAPL) and Amazon (AMZN) refuse to take a rest.
After hours earnings reports from Oracle (ORCL) and Research in Motion (RIMM) blew away the Street and both stocks are rallying in the post market. ORCL reported EPS of $0.42 versus $0.37 estimates and beat on the top line. Shares are up 3.5% in the after hours.
RIMM will likely dominate the headlines with its report of $1.46 versus $1.35 expected EPS and a beat on the top line as well. RIMM amazed the Street with its bullish guidance for Q3 EPS: $1.62-$1.70 versus analyst expectations of $1.39 and revenues of $5.3-$5.55 billion versus $4.8 expected. RIMM is trading up nearly 8% following the release. With nearly 6% of the float short they'll be on the run tomorrow.
Apple (AAPL) has reclaimed control of the market and is determined to take us higher. Shares of AAPL gained over $6 today (2.35%) as the iPad hits the world tomorrow for the first time. I continue to think $240 was an absolute gift and new all-time highs are all but inevitable now. My target remains $325 on this momentum run. Trading at just 16x forward earnings, this target may very well be conservative in the longer-term.
Copper has been an excellent leading indicator although I have lessened my focus on it somewhat recently. The equity market has some "catch-up" room where it could conceivably rally with copper taking a rest. Copper pushed through $3.50 today before seeing some selling. A move over $3.53 would make me significantly more bullish on equities.
Brandon R. Rowley
"Chance favors the prepared mind."
*DISCLOSURE: Long AAPL.