What Intel's Earnings Mean for You

Intel's blowout earnings report last night is certainly making it look as though earnings estimates were revised too low for corporations. And so the overwhelmingly pessimism that drove stocks lower since early May seems to be shifting to optimism that maybe things aren't that bad after all.

Intel's second quarter EPS were $0.51 on revenue of $10.8 billion. Those numbers crushed the analyst expectations. Analysts wanted $0.43 with $10.3 billion in sales. Guidance was also way above expectations. Intel's management expects third quarter revenue of $11.6 billion from $11 billion.

CEO Paul Otellini made sure to let analyst know during the conference call that this quarter was the best quarter in the company's 42 year corporate history.

It's clear that corporations have been spending money on technology. That's a key factor for the economic recovery. With record amounts of cash on their books, it's hoped that corporations' willingness to spend will translate to jobs growth.

I would also point out that Intel's bullish forecast bodes well for sales of Microsoft's (Nasdaq:MSFT) latest office suite.

Of course, we've only has two days of earnings season, so it's a little early to say that 2Q earnings will be great for all companies. Intel, for instance, traded higher following each of its last two quarterly earnings reports, only to give those gains up.

After six straight up days, it might seem like the market should pull back a little. And there should be a little nervousness ahead of bank earnings, which start with JP Morgan (NYSE:JPM) tomorrow.

But I have a feeling this market is not going to back off much, making it difficult for investors to find what they feel is an attractive entry point.

This is typical of the start of a good rally. The stock market will surge off of lows when investor sentiment is low, as the S&P 500 just did, jumping from 1,011 to 1,100. Now, investors will be torn by the dueling emotions of fear and greed. In one ear, greed will tell them to buy, that prices are headed higher.

But in the other ear, fear will say that they are suckers to buy after the break higher, better prices will be available if they just wait.

When this happens, the stock market tends to not give investors the lower entry prices they are hoping for. Investors are then in the difficult position of having to chase prices, which is not a comfortable place to be.

Fortunately, Daily Profit readers had the opportunity to get some upside exposure before the rally began with Citigroup (NYSE:C), JP Morgan (NYSE:JPM) and Maguire Properties (NYSE:MPG).

This will make it much easier to mediate between the voices of fear and greed.

There are a couple things we'll want to see in the days to come. Good earnings from banks aside, it will be a good sign if gold and Treasuries decline and oil prices rally.

Gold is especially important, as a decline for gold prices would be an important sign that investors are ready to embrace risk in the form of stocks and a general sense that the economy is improving.

TradeMaster's Jason Cimpl is very bullish on Chinese stocks. A year long bear market for Chinese stocks has left valuations at extremely attractive levels. And Jason is already seeing signs that these stocks are ready to move. One Chinese stock, China TransInfo (Nasdaq:CTFO), jumped 25% yesterday.

If you haven't signed up for Jason's TradeMaster Boot Camp you can should. This 5-part instructional video series is free and will help you profit in the stock market. You can sign up for the TradeMaster Boot Camp and start receiving Jason's e-letter, TradeMaster Market Forecast, HERE.

As always, thanks for all of your comments, and please keep them coming:dailyprofit@wyattresearch.com