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Two Ways To Play: Earnings? What Earnings?

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Strengthen your portfolio in good times and bad.

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How Bad Will Earnings Be?

The Wall Street Journal reports roughly one third of the S&P 500 will report third-quarter earnings this week, including titans like 3M (MMM), AT&T (T), Boeing (BA) and McDonald's (MCD).

Profits are on track to decline by 9.1% annually - and that number will likely worsen as more companies report. S&P 500 stocks look cheap compared to previous recessions, but analysts are still assessing what damage might be yet to come. One expert called recent weeks "the biggest pullback from risk-taking…in modern times." See this related column: Five Things You Need To Know: The Case Against The Low.

From the Bull Pen: Earnings are binary events, making technical metrics less useful. Nonetheless, look to stocks that remain favorable in a recessionary environment, like CVS Caremark (CVS). Sell stops can be set around $26.

From the Bear Cave: Stocks are currently oversold so the risks to the upside are greater. But bears can consider downside plays in retail stocks like Tiffany (TIF) if and when it can rally to near $35.


Quick Check Around the World

Asian trading closed with the Hang Seng 5.28%, Nikkei 3.59%, Sensex 2.48%, Taiwan -0.58% and Shanghai 2.24%.

Glancing towards Europe, we see the CAC +1.63%, DAX +1.09%, FTSE +2.06%,

As of 8:25 a.m. EST, S&P Futures are trading +21 to 954, and Nasdaq futures are +24 to 1335.


A Look At Commodities

Crude oil is trading +1.98 to 73.83. Gold is +9 to 795. Silver is +0.390 to 9.730 and copper is +2.90 to 221.00.

The dollar index is +0.018 to 82.431.


On the Radar

Economics

10:00 Leading Indicators (Sep)

Click here to see the full trading radar.

Happy Monday! Welcome back and good luck!

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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