Stocks Move Down On Low Volatility, Could July 2012 Earnings Surprise?
2nd quarter 2012 earnings predictions could beat – low expectations.
U.S. stocks fell today after gapping up in early pre-market trading as market participants wait for earnings news. Traders may not be as risk averse as in the last few weeks because some stocks are gaining momentum such as Apple even though semis are weak. We speculated this weekend that U.S. equities could exhibit a bearish, delayed reaction to negative June 2012 unemployment data that showed only 80,000 new jobs were created. Traders were on vacation and bearishness started the trading week off to the downside yesterday.
Earnings news from Alcoa wasn’t as negative as some analysts anticipated and the market could be poised for an earnings surprise upside move if benchmark companies report better than – low expectations. Low volatility suggests some investors are dipping back into stocks with an intermediate time horizon although bearishness could continue in the short run. We would consider this a buying opportunity and we are looking for optimal price points now before the earnings news begins to come in. Intermediate trends still favor long positions especially in industries that have corrected significantly. We are watching the semiconductor exchange traded fund SMH to monitor overall technology risk aversion.