Google Blasts Higher (GOOG)
The market severely and unexpectedly dipped yesterday. Especially in the Nasdaq, which was down nearly 2%. Volume also raced higher as the indices transitioned from gains following positive employment, inflation and sales data; and then quickly turned negative by noon.
In addition to the great economic data JPM blew away analyst estimates. The positive news from JPM had most big banks up 1% to start the session, but by midday the financial index was down 1%.
I expect nearly nothing from the market today. The 1301 support, and must hold level for the bulls, should keep the bears from taking SPX much lower today. But the bears are strong and they will likely protect 1315. Also, it's options expiration today, which is a notorious day for volatility.
But today may be a great day to buy more stock, especially on weakness. The pull back this week looks like consolidation before a blast higher. And given the fantastic earnings from Google (Nasdaq: GOOG) last night, AAPL, IBM, INTC, FFIV and the plethora of technology companies that also report next week could motivate the Nasdaq to move higher rather quickly.
The GOOG reported a huge second quarter yesterday. Google and two other technology stocks were in special report released this week, to get your copy of this report from Ian Wyatt click here.
Revenue increased 32% to $9.03 billion. Google posted a profit of $2.51 billion, or $8.74 from $6.45 a share in the second quarter 2010. Gross margin rose to 64.9% from 63.8%. Analysts expected earnings of $7.85 a share on revenue of $6.55 billion. Search paid ad clicks, the company's primary source of revenue, were up 18% compared with a year earlier and 2% sequentially.
Citigroup (NYSE:C) also joined the positive earnings parade. Citi made $1.09 a share in the quarter. Once again, the most important news for Citi was that delinquent loans and outright losses from bad loans fell in the quarter.
Citi was able to return $2 billion in loan loss reserves to the positive side of the ledge. That made up a good percentage of the $3.3 billion profit it made.
Perhaps the best news out of Citi was on lending growth. Consumer loans increased 11 percent to $244 billion. Corporate loans grew 22 percent to $197 billion compared to last year.
In addition to earnings data, the market will also receive another round of economic data this morning. The biggest metric to follow is CPI, which is the price consumers pay for goods and services. The CPI is expected to decline 0.1%, which means that prices, on average, declined in June. In addition to inflation data (core CPI is announced as well) the market will also receive manufacturing, production and capacity utilization numbers just before the bell.
Currently the TradeMaster portfolio is positioned long, and I intend to keep it that way. But if earnings reports begin to disappoint investors and economic data continues to be tepid I will recommend to cash-out and go short.
