FRi. OCT. 17- One Aspect Of The Fallout

A less-noted topic of this credit crisis which continues to really not be discussed in great detail by anyone –us traders or the media- is fallout to individual companies by exposure to such topic investments as AIG and Lehman. This topic has actually garnered its own daily table on the Dow Jones News Service. Basically, many companies had what they considered safe/stable investments in the bonds and equity of what was thought to be staid entities such as AIG or utilities. Well, when a utility like Florida Power& Light (FPL) can move double digit points in a day or two, there is a problem. And the largest exposed group of companies is the insurance industry. This is why shares of such companies as HIG, LNC, and PRU all were down yesterday; nobody knows what the damage will be to these entities. For the day trader, all we can do is stay attuned to the news. If, say, MET announced they have XYZ exposure, but everything is now clean because they’ve sold the investments, there is a trade there. However, the point here is that if a financial stock in particular declines for no apparent reason- realize, there is a reason.

Overnight, stocks rallied in Tokyo, but were down throughout the rest of Asia. European markets are up a little across the board as of this early writing. Oil is bouncing amidst reports of an emergency OPEC meeting. Look for weakness on the open, but with LIBOR coming down once again and good news in the tech sector, there will likely be some short covering. With it being an options expiration day, trading will continue to be volatile, but a lot more choppy than in recent days as there is a legit bid under the market now as shown by Warren Buffett’s editorial in the “New York Times” today.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

GOOG- great earnings

IBM- solid earnings off of its preannouncement…if market weakens, may be excellent short candidate with an 84 low yesterday

COF- decent enough earnings, but if financials weaken and this is initially higher, this will be one of the prime candidates to short thru unch

GILD- good earnings

CBST- great earnings

SLB- good earnings

ABK/MBI- strong yesterday; MBI should be bought at 9 or above if it gets there

AAPL, RIMM – among big-cap tech that are strong with GOOG…If market weakens, the weaker big caps are short thru unch should averages open higher

BTU, ACI, MEE, XOM, CVX, APA, DVN, MRO, PBR- all strong oil/coals…commodity itself was down which likely portends a rally in oil; however if market rallies and then weakens, this will likely be one of first sectors to weaken

KMB, CLNE- on Cramer’s show last night


Bad-

ZION- bad earnings; if financials strengthen and this opens lower, buy thru unch

TPX- terrible earnings; may be an A-B-A2 thru 7.50 if it opens down, but above 7.50

TRV, PRU, AET, ALL- all closed off their lows yesterday, but looking to see if rumors abound with options expiration today

DEI- amidst a good market, it was very weak in closing near a low…may follow through and look to short thru yesterday’s 13.80ish low if it does.
Earnings-

FRI OCT 17 BEF

CMA .46/669M .55/692M 2.05/2.77B 2.66/2.83B

FHN -.14/542M -.12/494M -.27/2.29B .32/1.95B

GPC .78/2.89B .77/2.71B 3.12/11.22B 3.27/11.62B

HON .96/9.62B 1.05/9.92B 3.82/37.98B 4.23/39.65B

LAB .05/69M .06/72M .26/327M .33/324M

PRSP .51/71M .54/72M 2.08/274M 2.25/298M

SAY .34/646M .36/669M 1.44/2.65B 1.68/3.23B

SLB 1.26/7.05B 1.38/7.48B 4.85/27.57B 6.03/32.85B

VFC 2.04/2.24B 1.75/2.13B 6.05/7.89B 6.66/8.56B

WL .41/184M .53/195M 1.14/760M 2.35/809M



Good luck today.

www.protradingnetwork.com
.

THURS. OCT. 16- Wow, The Markets Move Fast

Remember when bull and bear markets used to last for years on end? Well, we just had an official bull market between Friday afternoon and Tuesday morning on the Dow (approximately 24%) and had an official correction between Tuesday morning and yesterday morning ( a tad over 10%). So, what caused this latest decline? Two major things:
1) The credit crisis seems to continue relatively unabated. LIBOR rates as well as a host of other measures are indeed coming in a bit, but the difference is negligible. As Fed Chair Bernanke said yesterday, the credit markets will take time to “unfreeze” and the economy will not recover right away even if the markets steady. Thus, the hypothesis that all would be well evaporated as the morning progressed yesterday while the market instead focused on the realities described in articles such as this one:
http://www.bloomberg.com/apps/news?pid=20601110&sid=aiX1uD0VBnQ8
As was discussed in this space not long ago, the dry shipping sector is extremely capital intensive. Without access to capital, shipping rates implode as goods simply cannot leave port. Imagine if you would a scenario in which rotting meat and spoiled vegetables are simply left in the ports of major cities worldwide…do not imagine anymore…it is literally on the verge of happening.

2) The other issue at play is another topic touched on in this blog; namely, many hedge funds are liquidating in order to cover losses. Yesterday morning, anyone know what led the market down? Financials? Wrong-o. The answer is the petros. Shares of companies like Exxon and Chevron were down well over 10% much of the day while stocks like Apache and Transocean declined over 15%. Funds are being forced to raise money while many clients seek to redeem their monies from not only hedge funds, but mutual funds as well. Thus, the issue yesterday was more of a buyer’s strike than a seller’s stampede as nobody was around to buy beaten down shares funds dumped with trade volumes about ¾ of what they were on Tuesday.

So, what to make of today? Assuming the focus is on more of the latter, this hedge selling pressure is going to dry up as we exit the 1st half of October so if volume remains relatively light, look for some short covering as the day progresses particularly since LIBOR inched down, oil is off of its lows, the coal stocks are very strong on BTU’s numbers, and the dollar is much stronger against the yen. However, any negative credit news of any import will destroy that prognostication so as always, keep your eyes out for headlines.



Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

BTU- blew away earnings; should be strong all day long

C- good earnings; should lead the banks…should stay higher…watch out if it goes negative and short it thru unch

XTO- beaten down yesterday as CEO faced margin calls so sold a chunk of stock. Should bounce today; if it opens down, look to buy it thru unch…conversely, if it opens higher and weakens, short thru unch

PLCM- decent earnings

CCK- good earnings

OCCXD – received approval yesterday to sell product in Europe; looking to bu north of 4.50 when/if it gets there the first time it does get there

UTX- decent earnings

UNH- pushed up their earnings date in announcing good numbers

Bad-

EBAY- bad earnings…stock off of its after-hours low…if market turns, may be worth watching to upside; watch AMZN and GOOG as well

NVLS- poor earnings…looking to buy strength though as stock did not get hit hard

NUE, AKS, X – all steels weak yesterday; if more hedge funds sell today, these things could be pulverized yet they are among the first candidates in line for a bounce if that hedge fund selling evaporates

FCX, CENX, CMC - same story as steels and representative of coppers/metals

DRYS, EXM, GNK- dry bulk shippers well down based on symptoms discussed in that Bloomberg article at top of blog

POT, XOM, CVX, APA, DVN, RIG, BTU, ACI, MEE, PBR, HAL, APC- among others, energies/fertilizers/coals ravaged yesterday…same story as steels for a play today

HOG- leading motorcycle manufacturer not doing well; looking for A-B-A2 thru yesterday’s low around 24.45…with bad earnings out, however, if market turns, will be a buy thru unch should it open down

HOT- leading hotelier closed near its lows yesterday; looking for A-B-A2 to downside off of open if it sets up

WFR- demolished in recent days; if it is relatively strong around open compared to market, a likely buy thru unch should it open down

Earnings-

THURS OCT 16 BEF

AMB .68/170M 1.20/181M 3.61/735M 3.60/722M

APH .60/835M .62/852M 2.38/3.31B 2.65/3.54B

BAX .82/3.07B .90/3.28B 3.30/12.42B 3.78/13.38B

BBT .66/1.87B .67/1.92B 2.75/7.42B 2.92/7.83B

BK .70/3.69B .73/3.88B 2.81/14.94B 3.24/16.19B

BBW .00/109M .52/155M .56/482M .63/487M

BGG -.27/381M .03/494M .78/2.26B 1.16/2.32B

BK .64/3.71B .76/3.92B 2.75/15.05B 3.30/16.48B

BTU .87/1.67B .90/1.72B 2.82/6.14B 6.00/8.10B

C -.47/21.34B .24/27.41B -1.88/81.66B 2.02/116.92B

CAL -1.50/4.14B -.56/3.67B -2.76/15.42B 2.32/16.04B

CIT .17/550M .16/546M -.71/2.19B 1.14/2.15B

CY .30/575M .12/223M .75/1.66B .43/901M

DHR 1.13/3.23B 1.28/3.52B 4.39/13.06B 4.90/13.83B

FCS .24/432M .26/438M .85/1.70B .99/1.75B

HBAN .26/638M .25/647M 1.11/2.51B 1.16/2.64B

HNI .41/674M .50/657M 1.46/2.51B 1.67/2.47B

HSY .65/1.45B .53/1.39B 1.84/5.11B 1.89/5.26B

HOG .79/1.43B .62/1.32B 3.15/5.61B 3.33/5.69B

ITW .95/4.49B .91/4.60B 3.65/17.85B 3.95/18.91B

LUV .08/2.84B .10/2.77B .38/10.98B .61/11.97B

MER -4.08/1.69B .55/6.99B -10.53/8.83B 2.50/31.12B

NDAQ .49/408M .52/416M 1.98/1.50B 2.49/1.75B

NOK .50/19.00B .63/21.76B 2.25/78.32B 2.26/80.00B

NUE 2.16/7.47B 1.95/7.26B 7.47/26.62B 7.24/29.35B

PH 1.40/3.04B 1.33/3.03B 5.79/12.81B 6.16/13.14B

PNC 1.09/1.91B 1.29/2.02B 4.89/7.72B 5.34/8.29B

PPG 1.29/4.00B 1.22/3.91B 5.16/15.91B 5.83/16.59B

RS 1.98/2.40B 1.85/2.43B 7.548/8.68B 8.00/10.22B

SHW 1.27/2.19B .54/1.86B 4.02/8.03B 4.37/8.27B

SO 1.02/5.04B .25/3.08B 2.35/16.09B 2.47/16.84B

SON .64/1.10B .66/1.12B 2.46/4.34B 2.70/4.47B

SPWRA .56/351M .76/416M 2.32/1.43B 3.67/2.07B

TXT .87/3.59B 1.05/3.95B 3.82/14.71B 4.48/15.80B

UMPQ .20/89M .24/89M 1.03/349M 1.04/363M

UNH .73/20.04B .77/20.07B 2.95/80.80B 3.24/83.80B

UTX 1.33/15.15B 1.28/15.87B 4.95/60.30B 5.47/63.50B

WERN .26/571M .28/576M .91/2.24B 1.16/2.39B

WGO -.19/133M -.04/131M .43/652M .33/632M


THURS OCT 16 AFT

AMD -.40/1.48B -.25/1.60B -1.72/5.92B -.83/6.32B

CBST .33/109M .44/122M 1.08/421M 1.63/533M

COF 1.01/4.25B .82/4.36B 4.51/17.20B 4.53/17.73B

CYT 1.03/971M .97/976M 4.27/3.89B 4.61/4.04B

ESLR -.10/25M -.07/43M -.26/114M .42/422M

GILD .49/1.32B .52/1.39B 1.98/5.25B 2.29/6.17B

GOOG 4.80/4.05B 5.19/4.42B 19.42/16.06B 23.10/19.91B

HWAY .50/189M .36/183M 1.51/736M 1.62/744M

IBM 2.02/26.57B 3.16/30.73B 8.80/108.60B 9.64/113.23B

INFA .17/113M .24/130M .74/460M .88/521M

ISRG 1.27/227M 1.44/254M 5.11/890M 7.14/1.20B

LEG .35/1.11B .32/1.07B 1.14/4.24B 1.52/4.31B

MTG -1.24/443M -1.38/449M -4.02/1.75B -.89/1.87B

SONC .33/229M .21/196M .98/806M 1.09/844M

SYK .67/1.66B .79/1.88B 2.88/6.89B 3.42/7.61B

TMK 1.50/873M 1.53/878M 5.91/3.49B 6.45/3.49B

TPX .32/259M .34/259M 1.10/1.00B 1.24/1.02B

ZION .64/622M .59/634M 2.83/2.45B 3.58/2.68B










Good luck today.

www.protradingnetwork.com
.

WED. OCT. 15- Nationalizing The Banks

While it is stunning that the U.S. government has chosen to spend a chunk of its $700 billion grant on nationalizing many of the private banks by buying preferred shares in the firms, it is hardly unprecedented. The U.S. has a culture centered around laissez-faire capitalism in which ostensibly ‘anything goes.’ However, in the last century, the U.S. has nationalized railways, coal mines, steel mills, and taken a majority holding in certain banks when it deemed necessary. In 1917, in the name of national defense, the Feds seized the railroads for the purpose of making sure goods moved smoothly during World I; the bondholders and stockholders were paid quite nicely and the railroads were re-privatized in 1920. In 1952, President Truman seized 88 steel mills throughout the US amid worries of strikes although this was eventually rule unconstitutional by the Supreme Court. Most relevantly, in 1984, Continental Illinois was ‘deemed to big to fail‘ out of fear of a massive systemic breakdown. ‘Nationalization’ is a word certainly not popular in the U.S. as it (accurately) alludes to socialistic tendencies. The problem is two-fold- first, where does one draw the line? Should GM be nationalized? Second, the moral hazard issue- why should, say, MS get money pumped into it yet LEH was allowed to fail? Furthermore, it puts the finances of many at risk due to the sins of a few. However, rather than merely bailing banks/bad loans out as was originally envisioned, what is going on here is that the Fed is flooding the system with money and putting the name of Uncle Sam behind it. Ergo, by taking the ownership stake, it buys a lot of time as well as provides a backstop (along with the additional measures) to allow the banks time to heal. The hope is that the time that is bought will allow the banking system to become restore. The option of doing nothing is the one we faced last Friday morning: a complete meltdown of the system (i.e. Iceland as discussed yesterday). So, is this the right thing? It is not for anyone to say at Protrading Network and the taste of forced nationalization is a bitter one. However, nobody doing anything will keep the credit lockdown in place and further intensify for that matter. Yet, we do not want to follow in the zombie bank schematic that Japan managed to implement inthe 1990's by artifically keeping dead banks alive only to watch them fail when the monetary life support was removed. In the interim, we as day traders MUST pay attention in detail to what is going on because each headline can move the markets thus why so much time has spent in this space on the ongoing crisis.



Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

INTC- warned on revenues, but stock bounced anyway…more evidence of the fact that numbers this quarter probably will not matter per blog entry last week

DNA- missed on quarter with in-line guidance, but up amid speculation its deal to close imminently

ALTR- good earnings

CSX- neutral earnings (which should theoretically be good)

TIXC- huge rally into close

HBAN- very strong all day yesterday

KO- very good earnings

JPM- good earnings; short thru unch if market weakens assuming as it is up in pre-open

Bad-

EYE- very weak yesterday; if it gets down there, short 6.30s at yesterday’s low

ES- weak yesterday after warning; looking to short 5.30ish if it gets there

LLTC- weak earnings guidance

GHM- in midst of reversal after recent run-up

ATPG- massive reversal from 14 to 10 yesterday

ATVI- reversal from 15 ½ to 13

NIHD – reversal from 30 ½ to 25 ½

LEA- broke to new lows yesterday; if move continues today, look for A-B-A2 to downside particularly through yesterday’s low around 3.75

Earnings-

WED OCT 15 BEF

ABT .77/7.35B 1.04/8.21B 3.28/29.62B 3.66/32.09B

AMR -1.50/6.31B -.95/5.89B -4.94/24.03B -.43/24.23B

ASML ? ? ? ?

DAL .01/5.67B -.27/4.99B -.61/20.91B .86/21.31B

DRH .33/159M .47/224M 1.47/696M 1.33/688M

JPM -.08/16.72B .57/19.92B 1.73/72.97B 3.42/85.02B

KO .77/8.60B .64/8.03B 3.08/33.22B 3.36/35.40B

MI .23/648M .27/658M -.47/2.58B 1.50/2.71B

PJC -.16/94M .04/100M -.66/384M 1.65/446M

STJ .57/1.08B .62/1.16B 2.32/4.38B 2.62/4.80B

VCP -.16/376M .33/370M 1.20/1.45B 1.73/1.86B

WFC ,44/11.07B .48/11.35B 2.07/44.33B 2.30/46.92B

WED OCT 15 AFT

AF .42/127M .45/133M 1.57/482M 1.88/553M

CCK .67/2.37B .22/2.02B 1.67/8.45B 1.98/8.86B

CX .70/5.90B .42/5.49B 2.29/23.03B 2.13/22.42B

EBAY .41/2.16B .49/2.46B 1.75/9.00B 1.92/10.01B

KMP .59/3.41B .59/3.48B 2.47/12.75B 2.72/14.69B

LSTR .59/702M .60/717M 2.19/2.72B 2.49/2.96B

NVLS .04/246M .06/251M .32/1.07B .67/1.10B

PLCM .35/279M .40/293M 1.47/1.10B 1.71/1.23B

STLD 1.12/2.63B .98/2.62B 3.86/9.37B 3.97/10.08B

VMI 1.15/466M 1.26/482M 4.96/1.87B 5.86/2.11B

XLNX .37/483M .39/494M 1.53/1.97B 1.72/2.11B




Good luck today.

www.protradingnetwork.com
.

TUES. OCT. 14- Danger In Iceland

For those who haven’t avidly followed anything but domestic issues, the credit crisis without a doubt has had worldwide implications. For a little color, read below:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aVFtDRGwcc50&refer=home

Ostensibly, the credit crisis is particularly hitting many smaller nations very hard. In the case of Iceland, it just made cripple the entire economy. The Icelandic krona is rapidly devaluing to the point whereby the nation is having a brutal time importing anything. The nation waited and waited and waited to do something about their problems and the stasis may have cost the formerly prosperous nation its very viability. The Icelandic stock market, after a several day halt, opened down a whopping 76% this morning. The secret as discussed yesterday has been in opening up both interbank loans as well as nationalizing banking systems. Again, we are all free market believers, but it is a must to be pragmatic at this point. By seizing control of the banking system, Britain for instance gave credence –and confidence- to their citizenry’s banking system. In Germany, the government set aside the equivalent of $1.8 trillion of something quite similar. As long as everyone is on board, the worst is over…the question of course as we look forward is: is everyone on board with the exact same ideas with the exact same monetary considerations in mind?

Overnight, markets across Asia and Europe continued their rally amidst some more details of the U.S. plan to end the crisis. Markets should open sharply higher once again today. In all likelihood, there should be some profit taking after the huge run-up so look to short weakness, i.e. if the Dow opens up 250 and XYZ only opens up 20 cents, be looking to short XYZ thru unch if the market sells off. However, if there is no sell-off the first half hour, the rally will likely continue unabated catching more shorts off guards at least until mid-afternoon.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

C,WFC,JPM,BAC,MS,STT,GS,MER,BK- government planning on buying preferred stock in all companies; all should be higher…if not, short thru unch particularly pre-open

XL –stormed higher; looking for A-B-A2 to upside, particularly above yesterday’s closing 7.76 high

PBR- rallied 2 on close; looking to buy above 34 or short it at 34 or below if it opens north of unch

TSO- looking for continuation buy north of 11 if market rallying

XOM, CVX, COP, MRO, APA, DVN, HES, SII RIG, BHI, SWN, BTU, ACI, ENER - looking to fade open one way or another after its incredible moves last few days

FCX- gigantic rise in the copper producer; looking for A-B-A2 on strength or short if it opens higher and goes unch…ditto other metal entities like AA

AAPL, RIMM, AMZN, GOOG- big-cap tech very strong yesterday; looking to short pockets of weakness…looking for A-B-A2 to downside when/if market weakens

Bad-

NWY- very weak ;looking to short thru yesterday’s low around 4.05

WYNN- warned last night; look for weakness in all casino stocks including MGM/LVS

Pep- warned slightly on earnings guidance

Earnings-

TUES OCT 14 BEF

ADTN .35/136M .33/133M 1.28/520M 1.43/563M

DPZ .21/337M .28/451M .91/1.46B 1.04/1.49B

GAP -.32/2.22B -.36/2.18B -.86/9.63B .22/9.72B

GWW 1.53/1.80B 1.49/1.73B 5.92/6.94B 6.48/7.35B

JNJ 1.12/15.70B .96/16.51B 4.51/64.83B 4.72/66.12B
PEP 1.08/11.19B .92/13.33B 3.74/43.71B 4.13/46.76B

PII 1.10/563M 1.11/550M 3.46/1.96B 3.89/2.04B

PKX ? ? 10.62/28.10B 10.31/28.20B

SVU .69/10.11B .64/10.21B 2.95/44.99B 3.01/44.84B

TUES OCT 14 AFT

ALTR .30/355M .30/363M 1.19/1.41B 1.29/1.53B

CSX .94/2.91B 1.04/2.95B 3.66/11.49B 4.45/12.34B

DNA .89/3.36B .90/3.49B 3.46/13.15B 3.94/14.25B

INTC .34/10.27B .40/10.87B 1.26/40.26B 1.45/42.50B

LLTC .45/311M .45/315M 1.84/1.27B 2.03/1.39B

USNA . 60/112M .64/117M 2.32/439M 2.56/476M


Good luck today.

www.protradingnetwork.com
.