The Financials Pit Review
For the week of October 19th, 2009
By PitGuru Frank LaMantia
S&P & Currencies
Where is the market top and is there resistance? In my opinion the market is overbought and could slide 3-4% after the earnings week is complete. The market has generally shown the U.S. economy is resilient even in the hardest of times. The S&P does have small resistance in the low 1090's and had retreated once it reached that mark. I broke down a few days of earnings but listed the important ones to finish off the week. The tech market and financials both have had a positive run over the past few months. My personal opinion is that financials could slow down during the start of the 1st quarter of 2010. Techs could keep the market afloat while the financial sector sinks.
Earnings will continue this week. Hasbro (HAS) was expecting an EPS to be 0.93 and before trading today the company announced .99 cents. Actual earnings rose to 150.4 million from 138.2 million last year. The company claimed that toys for girls have been weak like toys for young boys reflected higher profits. Texas Instruments (TXN) is looking to earn .39 a share and many will be looking at this company’s earnings because it is a semi-conductor. Traders tend to look at the market in sections to see if trends are forming. By breaking companies up into sectors one could try to formulate market strengths and/or weaknesses. Jeffries (JEF) is expecting an EPS of .28 a share and may hit its target due to fixed income having a positive effect on Wall Street firms. The logic behind this is non-banks tend to have fewer write-offs during times of economic hardship. Apple (AAPL) after the close today will show its earnings - expected to be 1.42 a share.1 Like Goldman Sachs the world will wait to see its earnings. Have people been buying the new iPod? Is Steve Jobs’ health affecting how the company is run? On Tuesday expect a ton of earnings to be announced. Here are a few that could create buzz on the trading floor: Bank of New York (BK) .74 and BlackRock (BLK) 1.90 will both post their earnings before the market open which could create some momentum in either direction. Financials are closely watched because over 100 banks have closed since the crisis started in 2008. Caterpillar (CAT) is expecting .06 a share and may give insight to how farmers are currently doing. Here are a few more to keep you busy for Tuesday: DuPont (DD) .33, Coca-Cola (KO) .82, and Yahoo .07 a share. Wednesday has a ton of earnings as well, but here are a few that one should keep an eye on: eBay (EBAY), Freeport McMoRan (FCX), P.F. Changs (PFCB), and Wells Fargo (WFC). Thursday earnings will be announced with McDonalds (MCD), Potash (POT), Starwood Hotels (HOT), US Airways (LCC), and UPS. Friday will be the end to a busy earnings week and eyes will be glued to the earnings of Honeywell (HON) and Microsoft (MSFT).
As the stock market climbs to new highs the dollar is falling down .035 to 75.54 on early morning trading. Investors could still see a sluggish economy that may not come around for years. Also, the government showing little interest in rates could be another reason traders and investors are bearish on the dollar. Bonds have been pressured by decent earnings and a somewhat bullish stock market, but if rates rise and the stock market falls back the bond market could see a nice boost.
