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.

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