A widely-held celebration turns into a "sell-e-bration" as a trumpeted "Tech Rec" turns into a mini "Tech Wreck" of sorts in Friday's first half. As of 10:45 ET the S&P500 (SPY) is squarely flat and well-removed from fresh intermediate highs associated with the Opening Bell festivities.
I love the matter of fact headlines of "Stocks Pare Early Gains" from CNBC. It's almost as if the entire pre-market countdown wasn't about enticing investors to hurry up and send in those buy orders for the Opening Bell. Entering the session, it was all about large cap tech and associated IT spending coming to the rescue for bulls trying to push and prod those green shoots efforts into higher ground.
Last night Dell (DELL) beat by four cents on cost cuts while also managing to deliver an optimistic forecast. More elaborate details, which have already been plastered across the universe of bits and bytes for hours on end, are best viewed on cheerleading websites like www.cnbc.com.
As for trader reaction, out-the-gate bulls in Dell have been treated to the proverbial "Dude, It's a SELL." Quick-to-the punch session highs of 17.26 have been reduced by a full point with shares trading up "firmly" by 4.15%, but flat-lining near 16.30.
Elsewhere and in part a knee jerk reaction to Dell's guidance boost, in front of Friday's open Intel (INTC) upped its revenue guidance by $500M to $9.0B and boosted its margins as well.
The world's largest semiconductor company appears to be anticipating a tech upgrade cycle for businesses and perhaps for consumers like me as well. Personally speaking, seeing how I've missed out on the TARP, house and car handouts, I'd gladly upgrade were a "Cash for Clunkers" program for older model PCs mandated.
For their part, bulls in Intel are behaving a bit more appreciatively of the news. Shares of INTC remain firmly higher by a near identical 4.50% but much closer to its opening celebration highs. Technically, the action might be chalked up to Intel's four-week long bullish flag or flat base pattern versus a more extended looking technical chart in Dell.
In Friday's AIG (AIG) news i.e. the latest daily investor update as to the whereabouts of those shares not owned by the government; the stock is up once again, but under pressure intraday. Shares of the insurance behemoth are tacking on a mild but non-soothing 2.50% near 49 after hitting fresh highs near 56.
Responsible for Friday's early thrust was the well-used short-covering shtick (albeit ever-dwindling amounts at 18% of the float shorted) and plain vanilla technical momentum. Possible follow-through may have also been induced from an obscure analyst / cheerleader named Buzz Lightyear per Briefing.com. The "To infinity and beyond!" character wasn't really that optimistic. The reality is his forecast was merely for $100 a share. "Doink!"
Finally, some "Sell, Sell, Sell!" was found from the get-go this morning in potash farmer and Cramer favorite Potash (POT). Shares along with its group mates (MOS, MON, AGU and CF) have been underwater during all of Friday's large-cap tech festivities.
Apparently, the USDA "did their homework" and lowered its 2009 Farmer Income Forecast, therein sending the "Aggies" lower. The government body is calling for a 38% drop in income and below their prior forecasts [$54.0B vs. $71.2B], which is also $9.0B below the 10-year average. Now we're just waiting on "Dr. C" to tell us something along the lines of "They know nothing!" or simply and conveniently move on to the next bull market in tonight's show.
Chris Tyler
Senior Staff Writer & Options Strategist
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