Investors Want More Than "Matched Expectations"

amazon earningsNow that we are dealing with, in my opinion, an inflated market, investors are becoming more and more demanding of companies and their ability to squeeze out higher profits. Microsoft and Amazon were two of the many participants in today's earnings announcement and both beat expectations rather easily. However, for most of the day, investors were not satisfied. By the end of the day (after a massive manipulated push upwards in the markets) both stocks did end in the green, but far less than you would expect and directly after the news both took a rather strong tumble. The truth is, heading into the second quarter, investors want to start seeing evidence of stability and strong growth. This could be a difficult task heading into the second and third quarters.

As I expected, Thursday had much more definition than the last two days. After starting down over a 100 points, the Dow was able to rebound all the way back and actually close in the green today. By now, no one is surprised and with only 200M traders, it doesn't take much to push Wall Street around these days. One thing is for sure, there still exists a huge void of hedge fund and institutional traders. From what I hear on the street, many still are waiting on the sidelines, waiting for day traders and market movers to get bled out. Who knows when that will be?

I am keeping my eye on Verizon for the time being. I have enjoyed having Verizon in my IRA (considering their very strong dividend), but I do see some short term potential for gains as there is a strong buzz going around about them possibly getting the iPhone next year. Nothing has been officially confirm, but there has definitely been a lot of "flirting" from the two companies. Even today, Verizon said that they are ready for the iPhone when Apple is. Such a move would be a huge move for Verizon, as AT&T has been killing them in new contracts the past couple of years, mostly due to the large success of the iPhone. The mixture of Apple's iPhone with the much better Verizon network should be a strong combination. Also, as a result of this, I expect to see some weakness in AT&T's stock. So I will keep my eye on that.

After such a resilient turn around like today, it is tough to pinpoint tomorrow's trading. Part of me feels that Friday will bring an exhaust selling day with some profit taking nerves before the weekend, especially following the 130 point turn around we had today. However, another part of me feels that due to such a strong reversal, that could be for an even stronger day to close out the week. Whatever does happen, one thing is starting to trend. If we start out in the morning with a rather strong selling trend, I may pick up some longs, considering that recently the market movers have been very successful in some strong reversals. Happy Trading.


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