The Good, the Bad, and the Ugly

We have three notables reporting today, Apple (AAPL), Amazon (AMZN), and Starbucks (SBUX). Apple reported outstanding earnings and great growth, especially with the Macintosh with 2.3 million Macs sold last quarter, representing a 51% growth over the same period last year. Apple after hours trading was a wild ride, with its price ranging 20 points, with a low around 155 and a high tipping 170, finally settling down 57 cents in after hours trading. The regular session closed $162.89 (+2.69). It was pulled down temporarily on conservative guidance and lower margins (-10%). So, all things considered, Good earnings, conservative guidance. Same old story from Apple.

Amazon didn't fair quite as well, even though they came ahead of estimates, down in after hours trading 3.59 (4.43%). The market punished the online retailer for reporting earnings of 34 cents, 2 cents ahead of analysts expectations, on revenues of $4.13 billion. Revenue grew 37% and guidance was in a range of $3.875 billion to $4.075 billion, a little better than analysts prognostications, but not good enough. The problem was that Amazon was a little light on revenue guidance, stating $19.1 to $20 billion. Analysts consensus was $19.3 billion. Apparently the market wanted to see the upper range of analysts estimates, plus these targets calculate to lower overall margins. Tuff crowd, there's the bad.


Then there's the coffee maven, Starbucks. They warned big time and got crushed! I guess $4-$7 cups of coffee don't fly in a slow, struggling economy? I pay $9 for a 2 pound bag of high quality beans from Costco, which makes scores of java servings!

So, what can we expect tomorrow in the market? Tech futures are down this evening, so you can probably expect the Naz to be down at the open, with high P/E stocks taking the biggest hit. The place to be is commodities and staples. In a dragging economy, these are the stalwarts. Also, there's Microsoft reporting tomorrow, perhaps they'll show the way. Don't count on it.

Over all, the indexes recovered some today, with the Dow, S&P and Naz all retaking critical support levels, but it was a struggle, so no real conviction their. The positive is that the oscillators are all in good shape, so there's room for buyers to take control. They just need something to give them some incentive, and I don't think today's earnings provided the necessary dose. Right now we're trading in a range across the markets, and that's a tough place from which to predict up or down. Expect more volatility, murkiness and ugly, before they get more clear. I expect this is the type of action we're going to see through the rest of the spring and summer.

-zach bass