The markets survived yet again today with late day buy programs. There was no confirmation of the steep down move on Friday which was a result of Goldman Sachs Group, Inc. (NYSE:GS) being charged by the SEC with civil fraud. The markets survival again shows the ability for Wall Street to shrug off negative news on hopes and dreams. Tomorrow, Goldman Sachs reports earnings. They most likely will be huge and it is very possible this helped the stock bounce back today from early losses to close higher. After hours, Goldman moved higher as well. Consensus estimates are for Goldman Sachs to earn $3.98.
The earnings parade continued after hours with International Business Machines Corp. (NYSE:IBM). IBM reported better than expected earnings be did not beat the whisper numbers. In addition, margins were a little lower than expected. The stock sold off after hours by about 2%.
Apple Inc. (NASDAQ:AAPL) reports Tuesday after the market closes. This will be a huge report for the tech sector and most likely a major driver to the Nasdaq on Wednesday. The stock is trading near its all time highs just under $250.00. Technically speaking the stock is extended.
Looking at the markets, one must wonder about all the unknowns on the table. Europe is a huge question mark. Not only is a volcano erupting out of Iceland, costing the airlines one billion so far, but Greece is still in major trouble and it is just the start. As the markets appear to be held up by a mysterious force, one has to wonder if the purpose is to help unload issues from countries all over the world. There are many other countries that will see problems just like Greece. The question is, how will the market react.
In addition, financial reform is now almost a done deal. The question is how tough will it be. The civil fraud case against Goldman Sachs essentially ensured it will be semi tough.
What seems to be so secure at this point? The economic recovery in the United States and it seems like the markets are willing to forgive all else as long as that is on track.. My fear however? Consumer spending may not last, especially at this pace. This may be pent up spending that was held back for two years. A propped up stock market on massive stimulus and printing of money has shot the markets up. The end result is consumers willing to buy what they needed two years ago and maybe treating themselves to something nice. Will it last? What will the consequences of the massive printing of money? No one really knows but it strikes fear in my heart for the future. For now, enjoy the rally but keep one eye open at all times for a reality check.
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Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
