BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semiconductor longs, Biotech longs, Retail longs and Computer longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, most sectors are gaining and volume is heavy. Intuitive Surgical (ISRG) is rising 3.2% today ahead of its earnings report after the close, however the stock is still well off highs. I suspect the company will once again beat estimates and give conservative guidance. In the past, the always-conservative guidance has, at times, spooked investors. However, bullish sentiment is more subdued heading into this evening's report. The short interest ratio has increased from a low of 1.47 in February to 3.46 recently. The Open Interest Put/Call for ISRG is currently .93 vs. a low of .57 in March. Implied volatility has risen from 38% in September to 68% currently. HSBC recently initiated the stock with an overweight rating and put a $136 price target on the shares. I suspect that if the company is able to exceed estimates, which I expect, that investors will finally ignore the conservative guidance as the sentiment towards pure growth stocks continues to improve. I remain long the stock and still expect it to exceed its all-time high of $139.50 this quarter. I expect US stocks to trade modestly higher into the close from current levels on short-covering, strong profit reports, lower long-term rates, lower energy prices and investment manager performance anxiety.
Thursday, October 26, 2006
Nasdaq Surging on Heavy Volume as Corporate Profits Exceed Estimates, Energy Prices Fall and Long-term Rates Decline
Posted by Gary .....at 3:24 PM