Before The Bell: Goldman Cut and Hot Dog Miss
Premier investment bank downgraded, Home Depot whiffs.
According to Bloomberg, Merrill Lynch analyst Guy Moszkowski cut 1Q earnings projections for Goldman Sachs (GS) due to "recent market movements." Earnings for the world's premier investment bank was slashed from $3.97 to $2.31 which is lower than consensus forecasts of $3.34 per share. Moszkowksi also cut his 1Q revenue projections on the company to $7.5 bln from $9.6 bln and said that although GS "continues to benefit from relatively better navigation of the troubled environment," it is not "unscathed" given the greater macro conditions. Read Professor Bill Fleckenstein's column The Un-Credible Fed.
From the Bull Pen: Given the greater economic concerns that Moszkowski mentioned, bulls can look to play in the biotech sector for these stocks can trade in a world of their own. One option is Genentech (DNA). Bulls may enter should the stock fill in its gap at $75. Sell-stops may be set below.
From the Bear Cave: Bears can expect slashing estimates in the financial sector to continue and short the financial ETF (XLF); buy-stops above $80.
Hot Dog Miss
Home Depot (HD), the world's largest home improvement retailer, reported 4Q earnings of $0.40 per share, $0.03 less than analyst estimates of $0.43. Revenues came in at $17.66 bln less than consensus figures of $18.02 bln. Further, the company forecasted a 19-24% decline in earnings from continuing operations on a total sales decline of 4-5% for FY2008. Analysts were expecting an earnings drop of 8% on a 3% decline in revenues. See Professor Mish Shedlock's column Homeowner Withdrawal for context into Home Depot's issues.
From the Bull Pen: Bulls can find an upside play in Lowe's (LOW). The stock broke a one-month downtrend on yesterday's earnings report. Sell-stops can be set below $23.20.
From the Bear Cave: Bears can short HD; buy-stops above the 100-DMA (28.90). Other options include the broader retail ETF (RTH); buy-stops above $95.
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Traders turn to the Turnaround Tuesday ticks as they find foreign markets skewed to the upside.
Asian trading closed with the Hang Seng +1.92%, Nikkei -0.65%, Sensex +0.88%, Taiwan +0.26% and Shanghai +1.09%.
Glancing across the pond, we spy the CAC +0.88%, DAX +1.36%, FTSE +1.10%, ATX +1.46%, Swiss Mkt. +1.74% and Stockholm +1.41%.
A Look At Commodities
Commodities are lower. Crude oil is down -0.16 to 99.07. Gold is trading -1.90 to 935.70. Silver is higher +0.060 to 18.145, and copper is down -4.55 to 374.15.
As of 8:45 AM EST, S&P futures are trading lower -4.4 points to 1367, and Nasdaq futures are down by -7.7 points to 1777.
The dollar index is off -0.309 to 75.215.
On the Radar
PPI (m/m): 1.0% vs. 0.4% cons
Core PPI (m/m): 0.4% vs. 0.2% cons
PPI (y/y): 7.4% vs. 7.3% cons
Core PPI (y/y): 2.3% vs. 2.2% cons
S&P CaseShiller Home Price index: 188.8 Prior
10:00 Consumer Confidence: 82.0 cons
10:00 Richmond Fed Mfg. Index: -7 cons
10:00 House Price Index (q/q): -1.0% cons
5:00 ABC Consumer Confidence: -37 prior
Click here for the full trading radar.
Good luck and have a great day!
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