Microsoft, Amazon Action Bodes Badly For Tech
The bulls may have a battle on their hands Friday, after Microsoft and Amazon shares slipped in extended trade after earnings.
What must you know?
Microsoft posted quarterly results that exceeded Wall Street's expectations with Windows 7 continuing to be a growth engine.
However, shares fell in after-hours trading with investors hoping for more from a bellwether in a recovering technology sector.
> For more coverage of Microsoft earnings click here
Amazon beat the Street and posted first-quarter profit that surged 68%; despite the strength shares slipped after hours largely due to current-quarter operating income that fell shy of estimates.
> For more coverage of Amazon earnings click here
What should you make of it?
Strategy Session with the Fast Money traders
The pattern for Amazon going into earnings is that it moves higher into the release and then it sells off the next day, reminds host Melissa Lee.
Looking at Amazon, I’m a buyer if it dips down to about $135, counsels Jon Najarian. As for Microsoft I'm a buyer around $29. I expect IT spending to pick up and Microsoft should benefit.
If you’re long, I don’t think there’s any reason to sell, says Karen Finerman, although I can’t get behind the Amazon valuations. If you’re looking for a tech trade I’d put IBM on the radar. It's attractive a few dollars lower.
Looking at the market broadly I think we go higher, says Steve Grasso. Right now we’re defying gravity and you just can’t fight that. Portfolio managers are still chasing returns.
I’m broadly bearish but the market is resilient, reminds Guy Adami. Every time I think the market wants to go down, it just bounces back.
I don't think we're seeing a correctin, just a rotation, says Gary Kaminsky. We have 450 new highs on the NYSE and I just can’t believe the market will correct in that kind of environment.
OTHER AFTER HOURS ACTION
Of course many other companies also released results on Thursday after the bell. Here are a few more.
- American Express
American Express reported a profit and revenue that exceeded analysts' expectations on Thursday, sending the company's shares higher in after-hours trading.
> For more coverage of American Express earnings click here
- Capital One
Capital One posted a better than expected profit partly due to lower loan-loss provisions, as charge-offs likely peaked. Shares surged in the after market.
> For more coverage of Capital One earnings click here
What's the trade?
Consumer credit quality appears to be improving, says Joe Terranova. I'd look at a best in breed play with American Express.
OBAMA TRADE: FINANCIALS
President Obama traveled to Wall Street on Thursday, to once again make his case for financial reform.
Speaking at Cooper Union college in New York City, President Obama called on Wall Street to abandon its opposition to financial reforms, warning that the United States was doomed to repeat the financial crisis if lawmakers failed to act.
Despite being chastised by the President the financials recovered most of their losses following the speech.
What’s the trade?
I’m a buyer of financials , says Dennis Gartman. A lot of the stocks have been hammered by the Goldman news. I think most of this is baked in. The yield curve is positively sloped and that's what matters most to me.
CONSUMER SHARES HIT NEW 52-WEEK HIGHS
Consumer stocks were the market's one bright spot with mall, specialty and even restaurant stocks all higher in an otherwise weak tape.
What’s the trade?
I think it’s just rotation, says Karen Finerman. However, there’s no doubt the restaurant space has been on fire. One of my favorite names in this space is TJX, she adds
In this space, I like names such as Kohl’s and Target, says Jim Iurio on the Halftime Report. I don’t think the recovery will be straight up and these mid-level names will likely see an increase in business.
SOAP BOX: GUY ON QUALCOMM
Qualcomm weighed heavily on the Nasdaq Thursday after it fell sharply following its recent results.
What must you know?
Qualcomm is communicating poorly with the Street, says Guy Adami. But with that said, I think the pullback is an opportunity.
I also like Qualcomm on a pullback -- around $38, counsels Jon Najarian.
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Trader disclosure: On Apr 22, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (INTC), (GS), (C), (AGU), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IWM), (MDY), (IJR); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Calls; Finerman Owns (BAC) Preferred; Finerman Owns (GOOG); Finerman's Firm And Finerman Own (JPM); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (PLCM); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman’s Firm Owns (TJX); Finerman's Firm Owns (KFT), (WMT), (IBM); Terranova Owns (AXP), (TER), (SWN), (XCO), (HES); Terranova Owns (C) May Calls; Terranova Is Short Gold; Terranova Is Short (BRE); Karabell Owns (ADSK); Grasso Owns (DYN), (LPX), (ASTM), (ABK), (BAC), (BGP), (C), (CVGI), (JPM), (NEM), (PRST), (PFE), (BA), (T), (CSCO); Jon Najarian Owns (SYNA); Jon Najarian Owns (BAC) Preferred; Jon Najarian Owns (C) Preferred; Jon Najarian Owns (CME); Jon Najarian Owns A Seat On CME; Jon Najarian Owns (GS), Is Short (GS) Call; Jon Najarian Owns (JPM) Preferred; Jon Najarian Owns (LPX) Call Spreads; Jon Najarian Owns (MS), Is Short (MS) Calls; Jon Najarian Owns (MSFT) Puts; Jon Najarian Owns (QCOM) Puts; Kaminsky Owns (EXPD); Iuorio Owns (C), (GOOG), (GLD), (FXC); Iuorio Is Long Volatility In S&P Futures
For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
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Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)
For Steve Grasso
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Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)
Funds Managed By Dennis Gartman Are Short Crude Oil
Funds Managed By Dennis Gartman Are Short Euro, Sterling, Yen
Funds Managed By Dennis Gartman Are Long Gold
For Hilary Kramer
Kramer Is A Client Of Goldman Sachs
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