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
.