Markets Rally From Below

After starting the morning deep in the red, with the DJIA at one point all the way down at 13400, stocks turned course and pushed their way into the green. The Nasdaq led the major indices finishing up 28.77 points or 1.06%. The Dow also put in a solid performance as 19 out of 30 Dow stocks closed in the green. The averages now look like they are oversold after last weeks stumble and are ready for at least a small rally. With Apple reporting colossel earnings after the bell, we can expect the price action to continue upward tomorrow.

AAPL wasn't the only stock to rally after the bell. NFLX also reported earnings that handily beat estimates. They then rasied projected revenue guidance to anywhere from 297 million to 302 million dollars. In response to this news, shares jumped sharply higher and were trading at a 13 percent premium to the closing price.

So where does this leave us? We have multiple themes all playing out at once in the same marketplace. Concern over rocky credit markets has bears saying that people are underestimating the effects credit market and housing related turmoil has had on business in the US. For this reason they see earnings reports that will not meet expections and expect stocks to come down with weak reported earnings. Then you have the global growth story. Companies such as Catapillar are putting up big numbers from international markets in the face of a weak domestic marketplace. It's just further evidence that emerging market demand for construction equiptment, materials, and infrastructure is simply not going away any time soon. Lastly, you have tech. As today proves, estimates are just too low. The high flyers such as Google or Apple continue to whip the estimates and fly higher.

Right now, there's no need to dabble in the indices. Why buy the whole lot when you can get the buy the best? Plus, the indices move today is only a short recovery. We could be down again in a hurry. However, I believe you'll continue to see Apple, Google, Netflix, Intel, and Yahoo move higher. The initial pop is not all these stocks have to offer. Even if they consolidate now and maybe even dip a little, soon people will realize they're still underestimating their potential and buy them up.

I'll be back with charts tomorrow.

CM