Monday, July 12, 2010

Earnings Season...

AA started off the 2nd quarter earnings with a beat which "shocked" the street. That's because expectations have been so low that there are so many shorts leaning on the dang stock.

Having said that, it seems unlikely that AA will close much higher then where it was after hours, which was about $11.25, and I wouldn't be shocked to see the stock close red, or close to it.

The market is foward looking and AA and other stocks in that sector have been beat to death (or at least senseless) because of an anticipated worldwide slowdown. China amongst the biggest "alleged" culprit.

The stock futures gapped pretty stoutly after hours and looked headed a lot higher, with Booyahhead proclaiming "its time to get bullish".

Well, as I write this the futures are gapping down about 3 points so the key here will not be whether stocks beat estimates, because that's pretty much a given. The key therefore is how stocks hold up AFTER they beat. Does anyone believe that buying stocks here is the right move? I don't, but I'm not an investor and I don't fool that easy, I hope. And, I don't count, so really, are investors going to take this earnings season seriously enough to jump in, or do they wait for better entry points.

I think we should be looking day to day at stocks that have earnings upcoming in a hit and run trading plan. I am long INTC the last two days, and GE and GOOG and AAPL as well (AAPL a bit longer) and am up on all those positions (they are all options) but I've lightened up on the up moves as I don't want to be the last one holding the bag. I do think GOOG can see $500 into earnings Thursday, but we'll see soon enough. Watch next week earnings for clues to potential movers. I have a couple I'm giving to clients tomorrow after I see how the market reacts to the earnings beat by AA. I think we do get a further extension higher and should see 1100 S & P, but I'm not strong on that opinion at the moment.

That's the beauty of life and the market, everyone has an opinion, but the market is gonna do what it's got to do and we just try to hitch a ride...

See ya on the other side...RULE

Michael "waxie" Parness

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