Another Inside Day, Apple (AAPL) Ramps Up, RIMM and ORCL Beat

Thursday, September 16, 2010

Low end of the range bought again by the bulls

Another gap down was bought today in a day with a range even tighter that the previous couple sessions. The S&P traded within a 6-handle range but again showed a bullish bias closing on the highs of the day and near the top of the range. This has been a very healthy pause in the market as the initial leaders (NFLX, CRM, VMW, PCLN) have absorbed some needed profit-taking. Apple (AAPL) and Amazon (AMZN) refuse to take a rest.

After hours earnings reports from Oracle (ORCL) and Research in Motion (RIMM) blew away the Street and both stocks are rallying in the post market. ORCL reported EPS of $0.42 versus $0.37 estimates and beat on the top line. Shares are up 3.5% in the after hours.

RIMM will likely dominate the headlines with its report of $1.46 versus $1.35 expected EPS and a beat on the top line as well. RIMM amazed the Street with its bullish guidance for Q3 EPS: $1.62-$1.70 versus analyst expectations of $1.39 and revenues of $5.3-$5.55 billion versus $4.8 expected. RIMM is trading up nearly 8% following the release. With nearly 6% of the float short they'll be on the run tomorrow.

Apple to rule the world

Apple (AAPL) has reclaimed control of the market and is determined to take us higher. Shares of AAPL gained over $6 today (2.35%) as the iPad hits the world tomorrow for the first time. I continue to think $240 was an absolute gift and new all-time highs are all but inevitable now. My target remains $325 on this momentum run. Trading at just 16x forward earnings, this target may very well be conservative in the longer-term.

Doctor Copper is still resting

Copper has been an excellent leading indicator although I have lessened my focus on it somewhat recently. The equity market has some "catch-up" room where it could conceivably rally with copper taking a rest. Copper pushed through $3.50 today before seeing some selling. A move over $3.53 would make me significantly more bullish on equities.

Brandon R. Rowley
"Chance favors the prepared mind."

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