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Minyanville's Before The Bell: Chinese Chicken, BAC, EBAY, Futures Lower


Chinese banks are hoping to make moves in the U.S. BAC's earnings have opened investors' eyes. Futures are lower.


Morning Perspective: Chinese Chicken

The Industrial & Commercial Bank of China
and China Merchants Bank Co
. have applied this year to start operations in the The Chinese government is pressing to let the two banks open branches in New York without protectionist measures by the American government. (From BTIG)

Also, China's Citic Bank Corp denies it is in talks with Bear Stearns (BSC) in seeking a stake for the investment bank. The statement is contrary to comments made by China Banking Regulatory Commission Vice Chairman Jiang Dingzhi earlier this week that Citic had made a bid. (From WSJ) For more context, read Professor Depew's Five Things You Need To Know from last Tuesday.

The Bull Pen: With Chinese stocks receiving so much attention, investors should be aware of the risks of entering into "crowded" trades. However, investors seeking a diversified play might want to consider Morgan Stanley's China A Share Fund (CAF) with sell-stops at $62.80 (recent support) or the 50-day ($60).

The Bear Cave : The iShares 25 Index (FXI) has been a popular play on , but represents an ugly risk-reward profile. Todd mentioned in yesterday's Buzz the action in the FXI and other Chinese derivatives led him to believe "that we may be in the blow-off (final) phase. Traders playing the down-side could see a reasonable buy-stop at $220. However, Kevin Depew notes that the bullish price objective for the XI based on a point and figure price count is 240.

The Earnings Play

Bank of America
reported earnings of $0.82 per share, $0.24 worse than analyst estimates. Revenues fell 11.8% year-over-year to $16.3 billion versus $18.01 billion consensus. Todd noted other banks were in precarious positions in yesterday's Random Thoughts.

) beat analyst estimates by $0.08 for the third quarter with earnings coming in at $0.41. Revenues rose 30.4% for the year to $1.89 billon versus analyst estimates of $1.83 billion. Read Professor Tatro's Another Way To Play An Earnings Report for his methods on how he approaches earning's season.

The Bull Pen: BAC is offered lower in the premarket by -3%. The company increased provision expenses to $865 million due to increasing small business credit costs (meaning they are further bracing themselves for any downturns in our economy). Aggressive bulls that think the worst may be over could enter with sell-stops at the 52-week low ($46.52). They would, of course, know that this play could take some time.

eBay issued upside guidance for the fourth quarter with earnings coming in the range of $0.39-0.41 versus estimates of $0.38. CEO Meg Whitman stated that many business lines including eBay International, Paypal, StubHub, classifieds and adverstising business all performed above the company's expectations. Ebay bulls may set sell-stops at recent support levels ($38.10) or the 50-day ($36.82). Tertiary plays include Amazon (AMZN), Yahoo! (YHOO) and Google (GOOG).

The Bear Cave : Research firm Susquehanna urged investors to look through the "beat and raise" and focus on the company's weakness of eBay's core Marketplace franchise (which accounts for 70%-plus of total revenue). The firm believes the upside is related to FX gains and ongoing demand concerns were confirmed by eBay's recent reduction of listing fees. (From As eBay is lower in the premarket, near-term traders could set buy-stops at yesterday's closing price of $40.60, or a little higher at 41, which would be a double top breakout on a point and figure chart.

Have a look at Minyanville's Stocks To Watch for more company-specific ideas.

A Quick Check Around the World

Asian markets were mixed. The Hang Seng rose +0.57%, Nikkei +0.89%, and Taiwan +0.78%. India's Sensex continued another day of declines -3.83%, and Shanghai lost -3.50%.

Europe is lower with the CAC -1.085, DAX -0.86%, and the FTSE -1.18%. As of 8:40 AM EST, S&P Futures are down 8.50 points, and Nasdaq futures are down by 12.8 points.

A Look At Commodities

Gold is higher by +1.30 to 763.60. Crude is off by -0.03 to 87.37. Copper is lower by -0.35 to 359.25, and Silver is up +0.07 to 13.82.

On the Radar

Here is what to expect for today's session.


8:30 Initial Claims: 308 k prior
8:30 Leading Indicators: 0.4% cons
12:00 Philadelphia Fed: 8.0 cons

Some notable companies reporting today:


Click here for the full Minyanville Trading Radar.

Good luck and have a great day!

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No positions in stocks mentioned.

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