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Rally Stalls Despite Solid Bank Reports

JPMorgan Chase (JPM) and Citigroup (C) both beat earnings expectations on Thursday, but these financial giants were unable to keep stocks on their record-setting pace here in the early days of earnings season. The S&P slipped 0.17% to 2550.9, while the Dow was off 0.14% to 22,841 and the NASDAQ declined 0.18% to 6591.5. 

This earnings season is not expected to be as robust as the past two, as Sheraz Mian discussed in his recent Earnings Trends article. Nevertheless, there’s a good deal of optimism that the quarter will be strong enough to justify the market’s lofty valuations at the moment. More financial giants will be reporting tomorrow before the season really kicks into high gear next week. 

"The chop of earnings season begins. As companies report it will likely cause ebbs and flows in equities in a very uneven matter. Expect to be the hero one day and the villain the next. Keep your faith in long-term earnings trends and you’ll come out richer on the other side," said Dave in Momentum Trader. 

The editors weren’t very active in the session. They’ve been spending the last several weeks preparing their portfolios for earnings season, and now it's time to watch how their positions report and what new opportunities will be presented. So today’s highlights section has a couple excerpts from the commentaries and some info on our newest service, Technology Innovators. 

Today's Portfolio Highlights: 

Technology Innovators: This brand-new portfolio will be making its first picks on Tuesday. Brian Bolan plans to add about 7 names at that time, and then another 6 or 7 on Thursday as he hopes to get to 15 positions rather quickly. The upper-end goal is to have about 30 names. While you wait for the inaugural picks, read this new service's Guide and FAQ. And make sure that you receive the TI summary emails and text alerts by choosing them on your preferences page. If you have any questions, send an email to [email protected] 

Counterstrike: "This morning we saw some earnings out from a couple banks. Both JPMorgan and Citigroup beat on EPS, but both stocks were sold for most of the day. This is a common theme from the banks, they always seem to sell into earnings, but then grind higher over the next few months. If you’re long these stocks, I wouldn’t be worried about today’s price action. From what I saw the selling was pretty normal. 

"Domino’s Pizza (DPZ) also released earnings. They saw a 5 cent beat, but just like the banks the stock sold off. I would be surprised if we start to see a lot of selling into earnings reports based on how highs stocks have gone. A company is going to really have to kill it to get a bullish gap and go situation."
-- Jeremy Mullin

Options Trader:
"Most of the major indexes are within striking distance of making it five weeks in a row of weekly gains. And it won’t take much to get there. 

"I’m not surprised at this at all. As you know, I’m expecting at least 2,600 in the S&P by year’s end. But at this pace, I think we can get even higher. 


"These are historic times." -- Kevin Matras 

All the Best, 
Jim Giaquinto 

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