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Random Thoughts: Navigating Earnings and Europe

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See all sides as we piece together this puzzle.

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The holiday-shortened week is upon us and the bulls are feeling emboldened after investors shrugged their shoulders at last week's sovereign debt downgrades. They know, as do we, that the reaction to news is always more important than the news itself.

Of course, Europe is but one of our current focuses, albeit the one that matters most. Earnings are also front and center and while financials are notorious for looking ahead (on earnings) rather than dwelling on what was, we would be wise to watch Citigroup (C) and Wells Fargo (WFC)- which I thankfully covered in real-time on Thursday as a function of discipline-as well as JPMorgan (JPM). As go the piggies, so goes the smoke.

I continue to trade around my Research in Motion (RIMM) position from the long side despite the 34% rally off the December 2011 lows (and no, I didn't catch the bottom). While I remain of the view that it works higher, I've decided to only play the stock (I punted the odd lot March 20 calls) as I don't like owning fat-tailed options (and these puppies are pumped). I continue to hold the stock, buying dips and selling blips.

What else? Glad you asked. In no particular order:
  • The action in commodity land is worth a mention; in a correlated world, higher commodities-and yes, that includes oil-is asset class positive (including stocks).
  • We noted last week that overbought conditions can be worked off as a function of time or price. It would seem, at least at first glance today, that the former storm is in play.
  • Is Turnaround Tuesday actually Wednesday if the markets are closed on Monday?
  • Tom Petty. Cinco De Mayo. Austin, Texas. Booked!
R.P.

Twitter: @todd_harrison

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