WEDNESDAY MORNING UPDATE at 11:40 AM EST

Yesterday's action was encouraging, but not conclusive as selling continued this morning on the back of terrible news out of AAPL....At least that's the story if you listen to the talking heads on CNBC.

AAPL took a haircut down 13% this morning after reporting a softer outlook for the next quarter than analysts wanted to hear. Sucked in again!!!

AAPL always does this because they like to start every quarter on a conservative almost negative basis so they can come out as heroes by the time the quarter finishes. The last time they did this they were down 10% the next day, yet 10 days later were up 13% and had their best quarter ever.

The real numbers which don't make the front page were what they really should have been shouting from the rooftops...

The whisper number (I never have figured out who does all the whispering) for Apple was seen earning $1.62 a share on sales of $9.465 billion in its fiscal first quarter.

The REAL numbers were $1.76 in earnings on 9.6 Billion in sales. Another record, beating the same quarter last year that came in at $1.14 on $7.1 billion. Gross margin for the most recent quarter was 34.7 percent, up from 31.2 percent in the year-ago quarter. Apple shipped 2.32 million Macintosh computers, up 44 percent in units and 47 percent by revenue from a year-ago.

This is an old trick that for years INTC performed flawlessly for over 6 years, always beating their own estimates by the narrowest of margins. In fact they underestimated their earnings by just a single penny for 12 straight quarters during this period, always "Surprising" the street.

The financial sector XLF ETF is up 1.5% this morning, again seeing major banks charging higher for the second day even as we see triple digit losses on the broad markets. WFC is up 7.5%, BAC and JPM are up 4.5%. Looking at PCI you can see that while many segments are in cash, yesterday was actually an accumulation day in all but the Semis and Telecom.

Expect yesterday's low to be tested today. As I said yesterday, The panic sell and recovery was a little too easy.