Market Overview

Apple Topples Analyst Estimates Once Again

The
market jacked higher yesterday. The indices were
boosted by superb earnings results, mostly technology earnings from
stalwarts like Intel (Nasdaq: INTC) IBM (NYSE: IBM) and VMware (Nasdaq: VMW) which each reported record first quarters. Great financial reports
from those companies were enough to lift the indices over 1% and the Nasdaq
2%, and more importantly bring the indices back up to the previous highs
made in February.

 Just as important as the gains in price was the increase to volume
yesterday. An objection I have had about this latest rally from March was
that volume levels were low. A low volume level may indicate a lack of
confidence in a prevailing trend, which makes trading that current trend
unreliable. High volume levels during sessions that take the direction of
trend (for example: in a bullish trend the price moves higher on high
volume) do not guarantee an index further gains but it does increase the
likelihood of making higher highs.

 Volume picked up yesterday. It wasn't overwhelmingly affirmative, but
the above average total indicates that investors supported the rally. Of
course, now those buyers need to continue to enter new positions and get
the indices above resistance. Regrettably, Wednesday's highly bullish
session will be for naught if the indices do not make fresh highs.

 And the indices will be assisted today with more positive earnings
announcements. After the close on Wednesday tech giant Apple (Nasdaq: AAPL)
obliterated analyst estimates and raised guidance. Shares are up 3% to
start Thursday. The success of Apple underlines the hardiness of the
consumer and is a bullish sign for future consumer spending.

 In addition to AAPL last night, a slew of huge companies reported
record setting quarters. The most important companies to note with great
earnings were GE (NYSE: GE) Morgan Stanley (NYSE: MS) and Xerox (NYSE: XRX). Honestly, there were a ton of earnings today. In addition to the
three companies above McDonalds (NYSE: MCD) Newmont Mining (NYSE: NEM) and
Verizon (NYSE: VZ) also reported huge profits.

 The positive earnings were fantastic to see this week. Last week I
noted that first quarter results were mediocre, and corporate results
needed to improve this week. The earnings did indeed improve, and suffice
to say, the market liked them. Although I gushed over earnings, and how
bullish the market has become; this week's gain was most certainly assisted
by another big decline in the dollar, which is now down over 2% in April
and 7% for the year.

Over the past several months I
maintained a bearish near term and bullish long term forecast for the
dollar. While I still have that outlook, the dollar is literally at a must
hold price. In order for my long term bullish call to play-out the dollar
will need to hold the $75 area. Yesterday, the dollar indexed closed near
$74.37 and it looks poised to breach $74.23 (the lows from 2009) today.
Suffice to say, the dollar needs to find support next week or another 7%
decline is on the table.

 A decline in the dollar makes our exports more competitive, but
America lost its manufacturing prowess decades ago and does not need the
export assistance like the Chinese economy. A fall to the dollar makes
commodities more expensive and your pay check count for less, which is not
great for any economy. But the demise of the dollar makes debt payments of
the government easier to make, so you can bet Bennie and the Feds will
ignore the greenback's misery.

 At TradeMaster
we recently took a long position in Cardero Resource (AMEX: CDY) as shares
found support at $1.75. The downside is minimal since our recommended stop
loss is $1.78. However, shares look ready to climb higher and back to $2.20
resistance. So the trade-off is a 3% loss for 17% profit. If shares can
take out the resistance they have near $2.20 the stock could make a run
towards $2.70. The trade-off becomes a 3% loss for a 45% profit. The ascent
should be sharp, and I expect the trade to play out within two
weeks.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

Related Articles (CDY + AAPL)

Around the Web, We're Loving...

Partner Network

Get Benzinga's Newsletters