High Expectation Is Hazardous to Your Stock

First it was IBM

, which reported almost 8% growth in revenue, but

. The stock traded down 5.5% to 176.25/share during the day before a spurt of buying for the indices lifted the stock back to close at 178.9/share. Today it's Apple, Inc.

, when it reported after market close Wednesday, and

. Apparently, too many people were putting off their iPhone purchases last quarter in anticipation of iPhone 5, or as revealed, the iPhone 4S. This raised the question whether the strong sales of iPhone 4S over the weekend were due to pending demand from the last quarter, or whether it was true organic demand. As a result, Apple's stock declined > 6.5% in after-hours trading. Given this miss, it's unlikely that the stock will bounce right back in tomorrow's trading. Fortunately, disappointments in high-expectation stocks did not affect low-expectation stocks from rising. Goldman Sachs

, even

, only the second time in the history of the company since going public, rose more than 5% for the day. What's constructive for the market though, is action for Alcoa

. Reported earnings one week ago with

, the stock fell the day after earnings report, but now trades almost back to the level before that. Currently the market has high expectations on retail stocks, as Amazon

is near its high, and other retailers such as Tiffany

, Macy's

, and Kohls

have recovered a lot of their recent losses. The US consumers may be resilient even with consistent high unemployment, but if any significant player in the sector disappoints, particularly in forward guidance, it will very likely bring contagion to the entire sector. Investors beware. More

will be flooding in for the rest of the week and next week. Watch their actions and listen to the market carefully.