If IBM meets earnings estimates tomorrow night, the company will have Wall Street analysts to thank.
Over the last month, analysts have dropped estimates on Big Blue by 6%, from 97 cents a share to 91 cents a share, and analysts were still lowering their numbers last week. All without the benefit of an earnings warning. Perhaps in the era of Reg FD, analysts have rediscovered the lost art of field research.
By contrast, estimates on Intel , which reports tomorrow night, and Microsoft
, which reports Thursday night, have remained unchanged over the last 30 days. Intel is expected to earn a dime, and Microsoft 40 cents a share.
While the Nasdaq’s recent recovery has looked impressive from a chart perspective, one very important indicator has failed to support the rally. The commercial futures traders, the so-called smart money, remain bearish on the sector.
Commercials remain short the big Nasdaq 100 futures by more than 11,000 contracts – 38,020 contracts short, and 26,662 contracts long. They covered for about one week of the current rally, and have gotten shorter since as the rally has progressed. In other words, the smart money is not behind this rally. The non-commercials, meanwhile, are as giddy as ever, long by a margin of 13,152 to 4,730, and getting longer. In case you’ve forgotten how well this indicator has worked over time, we’ll repost Yngvi Hardarson’s 5-year chart plotting futures positions against the Nasdaq 100: http://www.mta.org/mtalist/NASDAQ100_COT_010720.gif. Tech bulls will have to overcome a lot of history to make this a bottom for the Nasdaq.
On the other hand, the S&P futures positions continue to improve, but haven’t reached bullish levels yet. Non-commercials are getting shorter (38,064 short-29,066 long), while commercials are reducing their short exposure and increasing their long exposure, but remain short by about 49,000 contracts, with 407,804 shorts and 369,049 longs. However, improvement is occurring at a snail’s pace, with commercial longs adding 3,849 contracts last week, and shorts reducing their positions by 763 contracts. But the trend is heading in the right direction: non-commercials added 2,994 shorts, and covered 996 shorts.
Finally, another look at Friday’s Michigan consumer sentiment survey. While the headline number was much better than expected, the improvement came entirely from consumers’ expectations for the future. Their assessment of current conditions continued to worsen. Added to a very weak retail sales report, the economic picture remains cloudy.
