Tuesday, July 9, 2013

A Reminder of Why I Hate earnings Season - 07/09/13

Ahhh, my quarterly earnings rant-

From Zero Hedge -

"Summarizing the above:
  • A week ago AA was expected to make over $0.07 (or today's result would have been a miss)
  • A month ago: over $0.10
  • In January: $0.17
  • Just over a year ago: $0.30
  • In January 2011: Q2 2013 EPS was supposed to be almost $0.70 cents"

For those long term followers of STB, you know I hate forecasting during earnings season. When the markets used to be somewhat real I would go into hibernation on definitive market calls for about a month. I would wait for AAPL to finally come and make the definitive launching beat, and then make decisions based on technicals and their lead. Most know I totally distrust the system as it was rigged before and is now more rigged than ever.

How many times have you heard me talk about them quietly lowering the earnings hurdles into QE, where no punishment is ever taken? INTC has been my favorite example of this over the years. Why no punishment? Simple, cause QE is driving the machine and up means up for everyone no matter the circumstances. Lower the hurdle on a massive POMO day and you get the benefit of the QE lift and the benefit of an easier beat later. AA is the textbook case. It's a win win for all involved, and one of the dirty secrets of their system. Healthy or sustainable? I think not.

It's horse hockey if you ask me, but what isn't these days? It is what is is, the best example of Wall Street "analysts" doing their best to A) mislead with unrealistic super growth projections (AA 70 cents), and then B) quietly lowering those estimates while you are not paying attention (cause the MSM ignores most of the downgrades) so the "beat" (.06 cents) is achieved.

A quality beat does not matter. The sheeple just hear the word "beat" and CNBS promotes the "beat" and you are supposed to follow the herd. Whatever you do, don't look under the hood. What you might find will be disappointing and could be considered a terrorist act one day if it already isn't.

We should look at the banks and their Repo 101 or their "adjustments" in loan loss reserves as their earnings are just around the corner. Talk about some BS accounting tricks. How nice would it be if we could use the same gimmicks for our personal finances? Talk about no consequences! And yet another circumstance where a beat is a beat and you are not supposed to look any deeper other than the headline.

AA Daily - Here is a great look at your economic "recovery". Support is gone and being backtested now. If that channel is right or if that was a descending triangle, what's coming may not be pretty. I guess the price action truly matches the decreases in estimates shown above. But a beat is a beat right? Hmmmm.... maybe not this time. Bottom line is this is one stock that has voided the rule that QE lifts all tides regardless of anything representing reality. Maybe AA is one of those indicators telling more truth than fiction?

Minis 30m - Did someone have a second major target of 1635 and the 61% retracement? How bout that backtest of the brown LT busted channel support someone (to the dismay of some) was really looking for? Yup, STB was there. Now that? Well, I talked about major inflection points yesterday, and today we sit at a point where if the 61% retracement fails along with the backtest of busted support, there is only one way to go and my next target may include a 17 handle if they continue on this course.

SPX Daily - Resistance busted and the indicators are climbing. Sadly they could not even give us a 38% retracement. WTF knows these days? I may just hibernate till my "event" happens as apparently nothing can bring this market down. There is a possible right shoulder set up here. Of course, if recent trends hold, that could mean a RS failure to a severe launch of price.

My second major target has been hit. This should be it. The 4th has come and gone. This exact point really has the potential to be "the" moment all the bears have been waiting for. Technically it should be, but a realistic market not centrally planned, run by elites, HFT bots and algos and fueled by endless fiat printing does not exist. We've seen this set up many times over the years where a technical must fail was a no brainer, and look at where we are today. This leads us back to my call for the STB "event". Apparently without it, you can only count on more of the same.

Our theory of they can't let the market fall has been proven time and time again. We've been on that thought pattern for well over a year if not longer. They simply can not let the market fall at all. All we can do at this point is listen to the taper talk and watch the bond market. The bond boys have an uncanny history of being right well before the fact, and they are almost screaming the impending doom is coming. Of course they are waging a major battle with the Fed gobbling up 70% or more of every issuance. (again - healthy, sustainable? I think not.)

I'm back in the office now. CO was a blast. Thanks for taking care of things while I was out. More to come below as usual.

Have a good day.

GL and GB.

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