Apple: Say it Ain't So!
Bears continued to win the wrestling match on Tuesday as more economic headwinds emerged. Yet perhaps what will put the bears over the top was Apple's surprise earnings miss after hours. Here is a recap of the increasing amount of bad news facing investors:
• UPS earnings were soft with poor guidance. These guys are as good an economic bellwether as any given how they touch so many different aspects of the economy.
• Yes, Spanish and Italian bond rates continue to soar higher. Italy is now creeping every closer to the feared 7% level. Spanish yields nearly guarantee that a massive bailout will need to be served up.
• PMI Manufacturing Flash Index came in under expectations showing further signs of slowing.
• Richmond Fed Manufacturing Index shows another key area of the country having a marked contraction in activity.
• Earnings estimate revision ratio first read after earnings season began = 0.45. Meaning that 2.2 times more stocks are getting negative estimate revisions than positive. This is the worst reading since the waning days of the Great Recession. The difference is we are now headed in the wrong direction.
• If Apple can't make earnings, then who can???
Add it all up and you understand why stocks were down for a 3rd straight session. And with the Apple miss now in hand, then likely we are due for a 4th serving of stock losses.
For traders out there you may find a bit of a bounce as the S&P approaches the 200 day moving average at 1315. Unfortunately with the increase in bad news, any bounce may be short lived as we will probably test the underside of this key level.
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Today's Top Stories: Wednesday- July 25, 2012
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