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| F5 Networks is the latest cloud computing company to report strong earnings and trade sharply higher. |
US stock futures are set to open sharply higher once again Thursday after another round of strong earnings report from tech bellwethers. The SPDR S&P 500 ETF (SPY) is now set to open right at resistance at the $134, and once again it will be important in the short term to see whether the gap holds. It has been a dramatic two-day bounce back for the market, which was still having some trouble trying to get back to highs. Although unemployment is still a worry, corporate earnings have buoyed this bull market over the last two years.
Last night it was Apple Inc. (AAPL)’s turn to drag the market higher. The second largest company in the world by market cap did not disappoint with its numbers after being in the doghouse over the past few months. AAPL reported a 95% surge in quarterly profits and topped revenue estimates by more than 1 billion dollars, largely in part to strong iPhone sales. The company also played down major concerns about supply chain problems in Japan and CEO Steve Jobs’ medical leave. The stock had also been hit recently because of index rebalancing that forced selling of AAPL stock. The stock is now up 5% in premarket trading.
Watch the T3Live.com Morning Call with Scott Redler and Alix Steel (below).
Perhaps the other most notable development from last night’s earnings lineup was the continued resurgence of cloud computing stocks. On Tuesday night, VMWare, Inc. (VMW) posted a monster quarter and ended yesterday’s session nearly 14% higher, back at all time highs. Last night F5 Networks, Inc. (FFIV) was next in line, posting a good quarter that was met with fervent demand from investors. FFIV is up more than 10% premarket, and like VMW’s report, has lifted the entire sector with it. Looking for a strong cloud stock that perhaps hasn’t run its course yet? Take a look at Acme Packet, Inc. (APKT), which has been one of the strongest cloud stocks in the market this year. With a nice two-day run it is close to breaking out of an upper level base, and could run into earnings with are Tuesday, April 26. If you don’t like holding stock into earnings, there is still time for APKT to breakout to new 52-week highs before the report.
Another sector to watch that has not been an earnings focus is the fertilizer group, which we cover here often. The group is prone to over dramatic sell-offs but usually rebounds well, and we appear to be in the midst of one of those comebacks. Over the last two days the stocks have bounced back above moving averages, although the intraday action was not great yesterday. The best set-ups are Agrium, Inc. (AGU), CF Industries Holdings, Inc. (CF) and PotashCorp./Saskatchewan (POT), and we expect to see more upside from these stocks over the next week.
Finally, with big cap tech seeing money rotating back in, what set-ups are still out there. The best two remain Amazon.com, Inc. (AMZN) and Netflix, Inc. (NFLX). Amazon has more room to highs after breaking its downtrend, while Netflix is pushing above a pivot before testing highs. Netflix could provide more momentum if it can break above all-time highs.
*DISCLOSURE: Scott Redler is long JDSU, GLD, REDF, CYD, OIH, MGM, BKS, LVS, POT, CIEN, AMZN. Short SLV.
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