Morning Market Thoughts
Good morning. We’re looking at a relatively flat open this morning. The FOMC is starting its two day meeting today, and the expectation that they’ll hike rates is quite low. For a lot of different reasons, I just don’t see a hike this time around. Usually we’d hear several FOMC members jawboning about a “live meeting” and “we could do it at any time”. But they’ve been quiet. Only Ben Bernanke has been in the press lately, asking folks to give him credit for the success of some of his policies. And hey, his widely read book is now available in paperback. “The Courage to Act” is now available in paperback for just $13.56 on Amazon. (Given all the money that he printed, $13.56 is nearly free).Apple (AAPL) is due to report earnings after the bell and the market expects a move of about $5 bucks. That puts the potential range this evening between $141.58 and $151.58. That’s your risk of holding the stock over earnings. I have no position in AAPL, but if the stock falls and tests the expected downside range, that will be a buying opportunity. And if it instead tests the $151.58 level, I’ll pay particularly close attention because the stock gapped up on fourth quarter earnings and is now more than 15% higher than the open. It never looked back.
But I think it’s reasonable to say that, as Apple goes, so goes the Nasdaq — at least for a day. Facebook (FB) will be reporting tomorrow after the close. That’s got an expected move of about $6.35. Because Facebook (FB) is already extended, the risk of a “sell the earnings” is higher than you might think. BUT…this is one of those stocks that does not reward pessimism. The uptrend has been pretty obvious for the past 3 and a half years. But if you look at the daily chart of Facebook (which hit an all time high yesterday, and will extend that streak today), you’ll see that bullish gaps after good earnings reports virtually always gave those who were patient a better chance to buy the stock within a week or two.
I hope you are doing well, and that your persistence and patience are paying off. Remember that trading is not easy…but it is quite rewarding for those who do the work.
See you in the forum.
–Dan
Market Update