I’m away again so this will be brief:
While we got the Fed speak we were looking for yesterday, the reaction was muted by another big drop in commodities including continuing weakness in the oil sector. The commodity drop was mostly caused by the China Bank raising their rates to slow down their 10% economy but that trend should reverse this morning as our own economy hits 5% growth.
The key is all the indexes held their lines though but, unfortunately, today will be another test as Mega Corp Microsoft, a big component in all the indices, blows it by a mile.
I did not see this comming and it kills me as $27.50 puts and calls were just .35 yesterday and a split would have yeilded a 400% return so far in pre market!
Gold was up and down and all around yesterday and I just kept buying it on the dips as the last time we were in a never ending war with a President that had a 33% approval rating gold was $800 an ounce (inflation adjusted $3,000).
This is why I went cash yesterday, any little thing was ready to hurt the markets and this is a big thing. After yesterday though, I’m hoping the losses today will be muted which would be a very good sign. GE and INTC gave me a lot of encouragement (2 that I still hold along with gold and SUN into earnings).
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You have to keep MSFT in perspective – earnings are up 17% on 13% higher revenues. Earnings are up 35% from 2003 yet the share price is down (assuming $25 this morning) 20% because the company “only” made $3Bn this quarter. I’m certainly not advocating catching this falling knife but I think they are going to lower expectations far enough to make this a great long-term play so I will be picking up some 2008 calls when the dust settles.
BVN (my second favorite gold play) beat by 50% with revenues up 59% so that bodes well for ABX next week. It remains to be seen how the markets react.
BIIB looks very good on great earnings and a nice report on Tysabri (another one) so I like the momentum of the $45s for $1.15 but I’m unlikely to buy anything today.
