• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Technology

All Eyes on Google

The search giant's results later today will be a particularly good test of the market's mood.
By JAMES "REV SHARK" DEPORRE
Apr 12, 2012 | 08:45 AM EDT
Stocks quotes in this article: GOOG

Success is following the pattern of life one enjoys most. --Al Capp

After a technical breakdown and a routine oversold bounce, the market is at a particularly interesting juncture as we head into earnings season. Google (GOOG) kicks off the confessions tonight followed by JPMorgan (JPM) and Wells Fargo (WFC) tomorrow morning before the onslaught next week.

Earnings will help to determine whether the recent downturn gains momentum or whether we bounce back and resume the strong uptrend that has been in place since last October. While the technical picture looks worrisome, the market has had a strong tendency in the last few years to right itself quickly just when it looked ready for a deeper correction.

Whatever the market ends up doing, you can be sure that earnings reports will receive the credit for the move. The important thing isn't the actual numbers but the market's reaction to them. Strong numbers that are sold may actually be more of a negative than weak numbers that are sold, as it indicates that buying power is being depleted.

Google will be a particularly good test of the market mood. The company disappointed last quarter after surprising to the upside in the third quarter of 2011. Expectations are mixed as Google has pulled back a bit in the last few weeks.

The big positive for the bulls is that we really have not had a disappointing earnings season since the market bottomed in March 2009. Companies have consistently posted strong numbers and the reaction has been positive. Last quarter we had more soft guidance than in a while but it was quickly shaken off in most cases. In fact, if you bought a stock that gapped down on poor guidance, you likely did well as they generally bounced back quite fast and turned positive.

The bears' best argument at this point is that the technical picture looks quite susceptible to another rollover after we work off the oversold conditions that are producing a bounce. Right now, the technical picture suggests that market players will be looking to sell into earnings reports. If there are disappointments, it won't take much for the downside momentum to grow fast.

What I struggle with in this market is the potential for another V-shaped bounce. Prior to the low in March 2009, I'd be leaning much more bearish in a market with this technical formation, but that simply hasn't worked in the last few years. The best move is to become bullish quickly after a drop and a bounce, as we tend to go straight back up.

In the old days, even if we did quickly bottom we would churn a bit and see some back-and-forth action before we moved back up. In this market, we hesitate little before moving straight back up.

For those reasons, I'm ambivalent about anticipating further downside momentum, even though that is what the traditional technical patterns suggest.

We shall see what earnings season brings. I'm looking for mixed action today after the reaction to weekly claims. I'll be looking for buys, but my time frame will be short term.

_______

Editor's Links

  • A Routine Oversold Bounce
  • Biding My Time
  • Time to Bounce
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Rev Shark had no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Technology | Stocks

More from Technology

For DOCS, the Writing Is on the Wall

Bruce Kamich
Aug 5, 2022 2:49 PM EDT

Doximity has not finished its decline, according to the charts.

Lost in Space: Virgin Galactic Continues to Come Down to Earth

Bruce Kamich
Aug 5, 2022 11:47 AM EDT

A trip to Necker Island may be a better investment here.

Twilio Trips Over Its Outlook: Can It Regain Its Balance?

Bruce Kamich
Aug 5, 2022 8:22 AM EDT

Let's check out the charts for its next move.

Oil Is Out, Tech Is In, but You Knew That Already, Right?

Helene Meisler
Aug 5, 2022 6:00 AM EDT

As energy is drained, someone told me this week how tech is now the long trade. Where have I heard that before? Also, let's look at the risks of the tech comeback.

Here's Why Apple Has Me Nervous About the Stock Market

Bruce Kamich
Aug 4, 2022 11:36 AM EDT

You may recall what I recently wrote about Costco.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:24 AM EDT PETER TCHIR

    Jobs Report Reaction: Incredibly Strong, But Questions to Ask

    An incredibly strong July jobs report. Not only d...
  • 08:54 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The Secret to Dealing With FOMO
  • 03:51 PM EDT REAL MONEY

    AMD Second-Quarter Earnings Live Blog

    Real Money's Eric Jhonsa covers 's second-quarte...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login