MV Weather Report: Will Earnings Season Mean Monsoon for JPMorgan, Google?
Rain or shine, we review the day's biggest stock stories.
Even though the S&P and DJIA closed higher on the day, weakness in the NASDAQ stuck out to me - and those were the stocks that led this run. Notable rally leaders that sold off today include Apple (AAPL), Research In Motion (RIMM), Amazon (AMZN) and Netflix (NFLX).
The financials led today. Goldman Sachs (GS) bounced back nicely after its equity offering announcement yesterday. The big banks also traded extremely well: Bank of America (BAC), Wells Fargo (WFC) and JPMorgan (JPM) all had up days. Google (GOOG) traded higher late in the day on a rumor that it was going to beat expectations (but we don't do rumors in the 'Ville).
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Tomorrow, traders will have all eyes on earnings. The big reports will be JPMorgan before the bell, and Google after the close. Also watch for earnings from Nokia (NOK), Titan Machinery (TITN), Intuitive Surgical (ISRG) and Sandisk (SNDK).
The current estimates for JPMorgan call for EPS of $0.32 on revenues of $22.953 billion. If Goldman's report was any preview for JPMorgan's, look for the company to smash estimates. The only issue: I suspect much of the report is already priced in, and we may see a sell-the-news scenario, as we did with Goldman.
Google's EPS estimates are at $4.93 on revenues of $4.084 billion. Google's quarter is difficult to game. It typically finds a way to beat EPS every time, but it might run into trouble now, with companies across the board spending less on advertising.
Here's a Buzz & Banter post from Professor David Dispennette explaining some earnings-related options trades:
"So, I've established another Put Spread (like Google yesterday) in JPMorgan by buying the April $32.50 Put and selling the April $30 Put for a total cost of $1.04.
"My downside is the entire $1.04, my breakeven is $31.46 and my maximum return will take place with a close below $30 on Friday, which will net me $2.50 for a 140% return.
"I also sold Intuitive Surgical April $100 Puts and bought Titan Machinery April $10 Calls as a way to play there earnings, also due out tomorrow."
All right, Minyans - there's a lot going on tomorrow. Rest up, and have a great night!
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