After the bell, Intel (NasdaqGS: INTC) reported a record year and higher than expected earnings with a whopping 4th quarter net income of $3.4 billion or 59 cents per share. The street had been expecting 53 cents a share. What also stands out to me is the company experienced top line growth and also gave a stronger outlook for the current quarter. The 4th quarter earnings were derived from revenues of $11.5 billion compared to $10.57 billion for the year earlier period. In one of my previous blogs at the end of last year, I eluded to the need for top-line growth as one of the key factors for the current market rally to continue. Now I know this is only one company reporting and indeed it’s encouraging to see some top-line growth, however this trend must continue on a much broader scale.

Next week you have got other Tech Titans reporting such as Apple Inc. (NasdaqGS: AAPL) and Google (NasdaqGS: GOOG) along with options expiriation. So I expect a very volatile week ahead and hopefully a very profitable one as well. Good luck to all.

~George

The first Dow component reported a solid fourth quarter with earnings coming in at 24 cents per share or a net profit of $258 million. Furthermore, Alcoa Inc. (NYSE: AA) is forecasting that global aluminum demand will grow at 12% in 2011 and the company is also optimistic on the United States. Why I like to view Alcoa as a barometer for the economy is that its business serves customers in many sectors such as automobiles, construction and consumer products just to name a few. Alcoa’s shares are off a bit in the after-hours session however the stock has moved up 50% or so in recent months so no surprise that the common is a little weaker after the report.

The after hours action is something to pay attention to as the reporting season continues. There is a strong possibility that when other companies do come out with their results, profit taking may occur and/or the earnings results may already be priced in (?)

Let’s see how Alcoa closes tomorrow to see if this trend continues. Tech titan Intel Corporation (NasdaqGS: INTC) is due to report their quarterly results on Thursday which should set up the Tech sector.

Have a great week.

~George

Earnings reporting season kicks into high gear next week with Alcoa Inc. (NYSE: AA) reporting after the close on Monday. All eyes and ears will be on what the company has to say regarding the health of the economy from their vantage point and what they forecast for the future. In fact, there are high expectations from the street across the board as to what most companies will be reporting in their results and what their outlooks are.

For me, earnings and outlooks will be a huge catalyst in whether or not equities continue to advance or if we see the correction that the short sellers have been waiting on for months now. My position is to wait to see how earnings play out and what the forecasts truly are before any meaningful investments are made.

Have a great weekend.

~George

Stock indexes rang in the new year with gains across the board. The 3 major indices all posted respectable gains today while reaching multi-year highs. The Dow closed up approximately 93 points, the S&P 500 up 14 points and the Nasdaq posted a gain of +38 points. However, the highlight of the day was the small caps, which notched the highest percentage gain of 1.98% in the S&P Small Cap 600 . In fact, the small caps also led the way last year with gains of over 20% outpacing their maturer brethren.

My goodness! This sounds like a broken record: markets up, gold up, fresh 52 week highs, etc. This bullishness has me a bit concerned here in the short term. Certainly, stocks can remain overbought or for that matter, oversold for extended periods of time. One of the metrics I refer to is the VIX index which acts as a fear gauge. The VIX index is almost at 52 week lows which means that investor sentiment is exceptionally high. The lack of investor fear and complacency could be a catalyst for the market to correct. The last time the VIX index was this low was in April/May 2010 right before we saw a 10% correction in the markets. Now I am not suggesting that this will occur again, however, historically speaking when the fear gauge hangs around these low levels, the markets tend to experience a pullback.

Having said this, if a pullback does indeed occur, this would be very healthy for the market which essentially has gone up in a straight line over the past few months.

Have a very prosperous week.

~George

The book is closed on 2010 and what a year it was! The final numbers are in: the Dow Jones Industrials gained 11%, the S&P 500 gained 12.8%, and the Nasdaq gained a whopping 16.9%. Congratulations to all of the bulls out there.

So how will equities fare in 2011? Could there be an encore performance in stocks? In my humble opinion, for the markets to have a repeat performance, we must see the unemployment rate come down significantly. This means corporations must be willing to hire and expand, enabling the consumer to start spending again. These three catalysts are essential for a meaningful economic recovery and to keep the markets appreciating.

Have a great trading and investing new year.

~George

And what a year it has been 🙂  That is, if you like volatility? We have witnessed market swings of 10% or more and in some instances this volatility occurred within a 3 month time period. Nonetheless, it appears that the major indices will end the year with double digit gains or certainly close to it. Seemingly, the economy is also demonstrating stronger signs of recovery as the consumer is spending more and job market gains are occurring. One may think that this should bode well for equities in 2011 and really be a boost to commodities in the new year. However, how much of this is already factored into stocks and commodities?

For me, that question will be answered as companies report their earnings results in 2011 and within those results I will be looking for top-line growth. Yes many of these companies have done exceptionally well this year with their bottom line results, which in turn has increased profits and cash on their balance sheets. However, most of these balance sheet gains have come from management running their companies better and more efficiently which includes higher productivity. However, the negative effect of such efficiencies has been corporate layoffs. So the minute I see consistent top-line growth which includes hiring, I then can get more comfortable in believing that this market rally can continue in 2011.

Have a great week.

~George

The Dow, S & P and Nasdaq all hit new 52 week highs today. In fact the S & P 500 closed at its highest mark since September 2008. What does all of this mean? Could this be the result of year end window dressing? Now that the S&P 500 has closed above 1250, could this be the technical breakout that everyone has been looking for? Or could this be the result of a bullish call today from the chairman of asset management at Goldman calling that 2011 could be the “Year of USA”?

I think it’s a combination of all of the above and then some. I know it is hard to believe that with the economy continuing to struggle and with the incessant high unemployment rate that America continues to endure, you ask yourself, how can stocks continue to lift? Let us not forget that markets tend to be forward-looking mechanisms and just maybe 2011 will become the “Year of USA”.

Have a great evening.

~George

Stocks continue to head higher as we close out the trading week with the Dow, Nasdaq and S&P 500 all flirting with 52 week highs. To add fuel to the fire after the bell Oracle Corp. (NasdaqGS: ORCL) reported their earnings with total revenues up 47% and a whopping $1.87 billion in profits. This should bode well for the Nasdaq tomorrow and keep the rally in techs going. Not only are the large caps performing well this year, but the small cap marketplace is actually outperforming their brethren. The Russell 2000 Index a small cap barometer is up over 20% year to date in yet another sign of optimism in the overall markets.

If you have been long this market congratulations for you have been on the right side of the trade for sometime now. Let’s see how this year wraps up and see if this powerful rally continues through the holidays.

Have a great weekend,

~George

Equities for the most part this year have enjoyed very impressive gains especially in the commodity space and in tech land. So with 3 trading weeks left in the year and with Christmas and New Year’s affecting the trading mix, how much higher can stocks go? Technically speaking if you take a look at the S&P 500 the broadest index of the big 3 you can see from the chart it is in a potential breakout mode, the same rings true with the Nasdaq, and the Dow appears to be setting up for a breakout as well. What this perma bull needs to see is significant volume in order to confirm a breakout. With the holidays approching typically volumes ebb, however if the markets are able to experience a big volume day to the upside, this would confirm the breakout and we then could be in for a real Santa Clause rally 🙂 Let’s see what happens and good luck to all.

Have a great week.

~George

Americans spoke out with conviction a month ago as the House of Representatives witnessed an historic land slide, the state governorships were also a landslide, the Republicans and businesses got what they wanted and they almost got the Senate too. Obama seemingly has struck a deal with the GOP on extending the Bush tax cuts for all Americans, this is all great news for businesses, the job market and expansion, right? Absolutely! Congratulations to Washington and America for taking a huge step in the right direction, but where is the huge market rally you may ask? Why aren’t we making new multi-year highs in equities and the like? Let’s put this into perspective. So far this year the markets have already notched double digits gains with incredible volatility and most likely if none of the above occurred, we could be talking about a very different market environment, as in Dow, S&P and Nasdaq possibly down 20% or more?

My takeaway is the changes that have indeed taken place from a policy standpoint and of course politically, could be the one-two knockout punch to unemployment and the fuel for corporate confidence and subsequent expansion. So I am not worried about the market churning right now and I think that patience is the name of the game.

All the best.

~George