Keystone's Morning Wake-Up 4/24/13; Durable Goods Orders

Happy Administrative Professionals Day. Hug your secretary. The fake tweet provided market drama yesterday. Independent of the reasons why, the DAX, CAC, FTSE, GOOG, INDU, SPX, COMPQ, in other words, major indexes, have all experienced mini flash crashes of -1% or more in the last week. These are not your Grandfather's markets anymore.  AAPL releases earnings last evening, there are so many parameters to study that anyone, long or short, can find a flag to wave.  In general, the earnings and top line were in line. The increased buyback news excites the bulls. Typically, buybacks are a gimmick to bounce stock price in the short term. Usually at three months out the stock announcing a buyback will be lower than the level at the announcement, however, the stock will pop on the news of the buyback. Thus, when AAPL began trading in the AH's, the stock jumped from the 406 closing price to over 420. The buyback news had done its deed.  In the con call, however, Apple said that the new products are likely in late 2013 or 2014 and would not commit to earlier offerings (although they are probably sand-bagging and will announce something in the summer).  This took the wind out of the sails.  Then Apple says the next quarter revenues may be lower. There goes another chunk of price.  The killer was where AAPL digs in on the skinny Smartphone screen. Clearly, the consumer is preferring the Samsung and Droid offerings with the wider screen but instead of a wider iPhone in the offing, Apple is saying do not expect it, our skinny screen is better. This is where price collapsed and AAPL dropped under the closing price of 406.

Markets ran higher yesterday on stronger semiconductors and financials  as well as lower volatility. Thus, the bears need to regain either SOX 424.15, XLF 17.98 or VIX 14.15. Otherwise, the bulls will continue driving the bus moving forward. The VIX is most important. The days forward will show whether SPX creates a right shoulder for the H&S pattern (head at 1600, neck at 1540, target 1480), or, the bulls push the SPX up through 1600 and negate the H&S.  For the SPX today starting at 1579, the bulls only need a smidge of green in the futures and the broad indexes will accelerate higher at the opening bell. The bears need to push under 1563 to regain mojo. A move through 1564-1578 is sideways action today. The S&P futures are currently up three.  The dollar/yen is 99.66, remaining elevated, so the equity markets remain buoyant. The 10-year yield is 1.72%. WTIC crude oil is approaching 90 and Brent moved above 101 which reinforces the bull case. Copper and commodities are gaining today recovering off of severe slides recently.  Mortgage Applications are out shortly; the trend was down but mixed lately. Durable Goods Orders is the key economic data today at 8:30 AM.  Oil Inventories are 10:30 AM.  5-Year Note Auction 1 PM.  Lots of earnings releases are on tap and will impact the futures moving towards the opening bell. Heavy-hitters today include BA, LLY, F, PG and S. The BOJ and yen continue to move the equities markets so watch to see if the dollar/yen 100 drama heats up again, or not. Very simply, the dollar/yen at 99.66-ish now, if it moves higher, the stock market moves higher, if it moves lower, the stock market moves lower.

Note Added 6:33 AM:  The Lilly may be wilting.  LLY beats on EPS but is light on top line revenue. This story repeats over and over, and over, again.  There are no top line sales increases which should be expected if an economy is recovering. And the top line misses are occurring across all sectors. Companies are simply laying off employees, whipping the ones remaining, and cutting expenses, doing more with less, and the EPS beats keep coming. Also, lowering the bar each pre-earning confessional season helps. The bar is so low that even Grandma Nellie in her orthopedic shoes can step across easily.  Interesting times. S&P's drop one handle on the LLY release now +3.

Note Added 7:01 AM:  F beats on top and bottom lines. North America sales are robust but Europe is in the tank. PG beats on EPS but top line revenue is light, same-o story (light top lines), and guides lower. Dollar/yen 99.58 a touch lower than the 99.66 above, thus, the S&P futures pull back a touch now at +2.5. The BOJ controls the markets with the earnings numbers providing tweaks in direction.

Note Added 8:14 AM:  BA beats on top and bottom lines and the stock runs higher.  AAPL is takin' the pipe, down to 392 pre-market, -3.5%.  What a move, from over 420 in the AH's trading, to low 390's now, over thirty bucks. Apple is attractive as a long from 370-390. AAPL's 200-week MA is 369.43 moving up, so call it 370, so that should hold as support and allow a recovery, perhaps into summer time.