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It's been a volatile and divisive earnings week but on the whole the quarterly numbers and the news flow coming from China have been good to us. The last report of the week was the best.

 

Expectations were low around Twitter (TWTR: $38, up 18% this week) and in the earnings call management didn't provided a lot of concrete detail on how fast they expect the business to accelerate this year. All we really got is revenue guidance for the current quarter that's roughly in our comfort zone (although the range is so big the final number could easily come in 5% below our target or 1% above it) and a promise that the company remains profitable. CEO Jack Dorsey spent more time talking about expanding payroll and other costs.

 

And those costs are already putting pressure on the margins. Twitter earned $0.25 per share last quarter when we expected $0.29, and $1 billion in revenue came in $13 million above our target. Evidently the revenue story is all that matters right now. The top line is rising 11% a year.

 

We would rather see better things from this company and that's where CEO Jack Dorsey is clearly thinking. But the stock was so depressed (down 28% from its 52-week high) that there was clearly too much pessimism here to withstand even decent numbers. Sometimes it only takes showing up to cut through the gloom and get investors cheering. That's what happened here. We like it. It sets a great tone for next week and beyond.

 

This week, meanwhile, has been fractious but biased toward the bulls. A harrowing 15% of the S&P 500 has moved up or down 5% or more since Monday morning, which is a long way for these big stocks to go. The good news is that the surges outnumber the slides by a factor of 3 to 1, including Microsoft, Amazon and Twitter. A rally is good. Breadth is even better. All but seven of our stocks are participating. While the mood might turn brittle after earnings season ends, this has all the earmarks of a good quarter shaping up.