Momo Earnings

NFLX gave a huge reality check to the momo fever.  After days like yesterday, when the overall market was going up but the momentum stocks were going down, flashing red lights came up.  After a huge run, you see that the buying has just been exhausted short term.  The earnings expectations are sky high for these momentum names now, after the earnings beats this year in FB, LNKD, TSLA, YELP, and the others.  It is almost taken for granted that these stocks will beat earnings and gap up the next day.  Next week, you will have LNKD, YELP, and FB reporting earnings and I just have a hard time seeing them go much higher after earnings due to high expectations.  I expect these stocks to take a rest for the rest of the month, as profits are taken and earnings are used as a sell the news event.  Then you get in there and buy these stocks up for the monster run into the Twitter IPO on November 15.

On the overall market, I am still very constructive, we have had a huge run since bottoming 2 weeks ago.  So we should flatten out here, but I don't expect much of a pullback, maybe 20 SPX points, before we grind higher again.