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Earnings Fail To Excite Market! SPX, Nasdaq, AAPL, TXN, BLK, BTU, YHOO SNDK, CREE, ISRG

|Includes: Apple Inc. (AAPL), BLK, BTU, CREE, ISRG, TXN

Although both AAPL and TXN reported solid earnings yesterday, they were not enough to draw more buyers in, just yet.  The market took a breather as the dollar managed a bounce, which resulted in weakness in the commodity sectors.  AAPL closed below the $200 level, up just +4.69% from yesterday's close.  TXN barely kept in the green!  This morning BTU beat the estimates on its earnings; it opened strongly, above $45, but, immediately started see profit-taking.  BTU finished the day only up +1.01%.  BLK also saw similar profit-taking activities.  BLK's profits soard +46% and traded as high as $240 from yesterday's close of $230.43.  It closed at $236.6, up +2.68% for the day.

After the market, YHOO easily beat its earnings estimate, showing a quarterly profit that more than tripled from the year before.  YHOO shares jumped +5% in the after-hours trading.  SNDK also delivered a superb report, sending its shares up more than +10% this evening.  ISRG reported results that beat the estimates.  However, its shares sank almost 6% after the report.  In our Trading Room today, I pointed out to avoid playing ISRG earnings, even though it looked strong during the day:

October 20, 2009 11:44 AM
ISRG
quite strong ahead of earnings... premiums really high on options...

October 20, 2009 11:52 AM
ISRG
I'm not playing this one this time... premiums are too high...

Last quarter (July 2009), I scored a +300% winner on ISRG, when the stock just started to ascend and had a lot more room to go higher.  At the time, the price of the options made sense.  This time, the premiums were just too high.  Since before the earnings last quarter, ISRG had already jumped more than $100!  The November 300 calls closed at $6 and traded as high as $8.3 today.  This means that ISRG would have had to jump at least another $30 to have the prices on the November 300 calls make sense.  Given the reaction on earnings lately where premiums get crushed after the reports, I thought the risk/reward ratio was too high, and, the charts did not support a major move on ISRG.

CREE posted earnings that were above the concensus by 8 cents.  Its shares went up +3.6%.

The Dow closed down 50.71 points; SPX dropped 6.85 points; Nasdaq lost 12.85 points:

Most sectors were down today.  Commodity sectors were mostly weak: XME (metals and mining) -1.1%, GDX (gold miners) -2.12%, OIH (oil services) -1.32%.  Both GLD (gold) and SLV (silver) traded lower.  UNG (natural gas) was up +2.75% while USO (oil) slid 0.91%.  XLF (financials) fell less than 1%.  FXI (Chinese ADRs) slid slightly.

SPX

SPX lost 6.85 points to close at 1091.06.  It still was not able to penetrate above the 1100 level.  Its MACD flattened.

Nasdaq

Nasdaq fell 12.85 points to close at 2163.47.  It touched its 10-day MA, but, bounced back up.  Its MACD slid.

Today's actions show that the market is a bit tired.  Profits are being taken on good earnings instead of driving the stocks even higher.  After all, the market has climbed quite far in the past 2 weeks.  For the past 4 trading sessions, the market has been treading water, which means some consolidation is happening.  Both SPX and Nasdaq are sliding away from the daily upper BB.  This shows a lack of immediate momentum to push the market higher.  Unless the market can jump back up to catch the daily upper BB, the market may just go into a consolidation mode.  The support levels are still SPX 1080 and Nasdaq 2150, as discussed in my Market Forecast this weekend.  As long as these support levels hold, the market's bullish trend should stay intact.  So, no hurry to chase a lot of trades right now, and be little more careful.

Good night and HappyTrading! ™