Daily Stock Pick of the Day - Tues, Oct 19, 2010

Stocks edged higher today ahead of Apple's (AAPL) earnings report.  As of this posting (after the close), Apple has reported earnings of $4.64 per share, blowing away analysts expectations.  The bellweather tech company said sales of it's popular iPhone surged in it's fiscal Q4.  iPhone sales climbed 91% to 14.1 million during the quarter.  Analysts were expecting earnings to come in at $4.08 per share.  Shares of Apple were halted today, but did close the day at $318. 

The Dow rose 80 points, or 0.7% to 11,143.  The S&P 500 rose 8 points, or 0.7%, to 1,184. The Nasdaq rose 11 points, or 0.5%, to 2,480. The CBOE Volatility Index fell below 19 today.  Leaders today included Bank of America and Citibank -- surprising considering the mess with the foreclosure debacle.  The dollar fell today against a basket of currencies.

I still have a cautious outlook with this market.   The rally currently underway has real strength.  My concern with it comes from the fact that the banks are going to incur steep costs in absorbing the fallout from the foreclosure crisis.  Without a recovery in housing, the economy cannot recover fully.  For now, the trend upward, even at a mild pace, is definitely intact, but without further catalysts, I'm not sure we'll break out much beyond the current levels.  I think anyone with profits in their account right now should seriously consider taking some off the table. 

Today's stock pick of the day is: Skyworks Solutions (SWKS).  Skyworks supplies radio frequency components and analog and mixed signal semiconductors to different end markets, including smart phones.  As mentioned earlier in this post, Apple's iPhone and sales of other smart phones (RIMM, Broadcom, Nokia, etc) are booming.  As a result, there is strong demand for Skyworks' chips.  Zack's has published a recent report saying Skyworks "is well positioned to benefit from the recent trends in the handset market, which are favorable for increasing the dollar content of rf components."  Skyworks closed at $21.63 today and it has been on a nice, steady incline for the past 5 months.  It pulls back just enough at times to give investors a chance to get it in.  The stochastics look a little overbought right now, but this stock definitely warrants a spot on your watch list.  I'd like to see this pull back to the $20 range and start a position from there. 

As always, stay cautious.  Happy Trading!

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