A lesson About After Hours

If you don't specialize in after hours or pre-market trading (and there are those who do, their work days are very short) then you need to be very careful. Last night AAPL posted a BLOWOUT quarter, absolutely amazing and they guided, as usual, below consensus so the next earnings quarter, they'll beat again; AAPL has done this as long as  can remember, the old "Scotty" from Star Trek routine.

Take a look at AAPL this morning...

It's falling and already on huge volume.

And here's last night's After Hours quotes from NASDAQ.com

Someone paid $405 and a lot of people paid $404, this morning, they are at a loss of 4+%

You have to remember, there are pros trading after hours and that's all they do. As for earnings, a blowout quarter "CAN" create a sentiment trap. The market is forward looking, earnings aren't so much about what you did, but what you will do moving forward, that's why guidance is one of the most important parts of the earnings call. If smart money believes AAPL just posted their best quarter and economic conditions are going to prevent them from posting an even better quarter next earnings season, then it's "sell the news". The market isn't about fundamentals, it is 100% about sentiment.

Within the next few days, we should have a pretty good feel for sentiment toward AAPL. Above all, always be wary of the knee-jerk reaction.