Dow 30 Earnings Reports
July 8, 2008
Hickey and Walters (Bespoke) submit:
While much of the news surrounding earnings reports focuses on how much a company earns, the real test of how good or bad the report is depends on how the stock reacts. For those interested, below we highlight the percentage of up days on the first trading day following an earnings announcement for the 30 Dow stocks since 2001. For companies reporting in the morning, we use that day’s trading. For companies reporting after the close, we use the following day’s move.
As shown, Boeing (BA) has generated positive one-day returns following earnings two-thirds of the time since 2001. This is the most positive price reaction of any of the 30 Dow stocks. BA is followed by UTX, T, IBM and MRK. On the other hand, GM has only gone up 25% of the time following earnings reports. Other Dow stocks that are generally weak in response to earnings are MCD, PFE, AA and XOM.
Is it Time to Back Up the Truck?
July 8, 2008
Jeff Pietsch submits:
Is it Time to Back Up the Truck?
Tuesday Options Outlook: EMC, XLE, USO, GS, WB, C, CROX, LOGI
July 8, 2008
Rebecca Engmann Darst co-authored this article.
EMC Corp (EMC) – News of the departure of (VMW) founder
and CEO Diane Greene and a sharp cutback in its year’s sales guidance had
a predictably awful effect on VMWare (whose shares paid a 25% penalty to
$40, crashing through the 52 week low, and implied volatility spiraled by a
nearly identical percentage rise). But it was downright deleterious for
VMWare’s parent company, EMC Corp, where the perceived risk
measure rose 28.9% to 51.2% -a six-month high. Compared to the 30% volatility
shown by EMC shares in the past, we can conclude that the news out of VMWare
has led option traders to ascribe about 61% additional price risk to EMC Corp
shares over the next 30 days, with a pronounced bias to the downside. Even with
its earnings report scheduled for July 23 (coinciding with the August options
contract), we observed traders sell out of July 15 calls, the value of which
have plummeted 86% to just 7 cents today. Fresh put buying at the August 13 and
14 strikes suggest further declines past these newest lows in the aftermath of
earnings. Evidence of stability in EMC Corp’s share price surfaced
further out in the option calendar, notably in January calls, where calls at
strikes 12.50 and 15 were heavily bought on the offer.
Tuesday Options Outlook: EMC, XLE, USO, GS, WB, C, CROX, LOGI
Preparing for Bear Stearns II?
July 8, 2008
Brett Steenbarger submits:
Thanks to an alert reader for this heads up on Fed Chair Bernanke’s recent speech posted to the FRB website. I found this portion of the speech particularly interesting:
In general, our system relies on market discipline to constrain leverage and risk-taking by financial firms, supplemented by prudential oversight when government guarantees (such as deposit insurance) or risks to general financial stability are involved. However, the enormous losses and writedowns taken at financial institutions around the world since August, as well as the run on Bear Stearns, show that, in this episode, neither market discipline nor regulatory oversight succeeded in limiting leverage and risk-taking sufficiently to preserve financial stability.
Preparing for Bear Stearns II?
Financials to Oil Ratio as a Bottom Indicator
July 8, 2008
Bill Luby submits:
Two numbers have been moving consistently in the wrong direction for the US economy during the past few months: oil prices and bank loan portfolio quality.
Financials to Oil Ratio as a Bottom Indicator
Is Bernanke Hinting Something About the Fed’s Rate Plans?
July 8, 2008
Kathy Lien submits:
With stocks falling close to a 2 year low yesterday, Fed President Ben Bernanke attempted to stabilize the stock market and the US dollar by saying that they they are considering “extending the duration” of their emergency lending facilities to investment banks.
The Fed is clearly worried about the volatility in stocks and they have good reason to be because in as little as 2 months, the Dow has plunged 15 percent.
Is Bernanke Hinting Something About the Fed’s Rate Plans?
Family Dollar Stores Inc. (FDO) is a BUY
July 8, 2008
BUY
rating on Family Dollar Stores Inc.
(FDO)
Start Price: $23.92
Start Date: 07/08/2008
Family Dollar Stores Inc. (FDO) is a BUY
Benihana Inc. (BNHN, rated BUY)
July 8, 2008
Benihana, Inc. operates Benihana teppanyaki-style Japanese restaurants in the United States. It serves fresh steak, chicken, and seafood; raw bar items and Japanese cuisine; sushi and the Pacific-Rim dishes; and Japanese fusion dishes. As of May 31, 2008, the company owned and operated 60 Benihana teppanyaki-style Japanese dinnerhouse restaurants, including 1 restaurant under the name Samurai and 19 franchised Benihana restaurants, as well as owned and operated 9 Haru restaurants and 19 RA Sushi restaurants. Benihana, Inc. was founded in 1964 and is headquartered in Miami, Florida.
| Analysts’ Recommendation: |
Buy |
| 30 Days Ago: | Buy |
|
|
|
| Analysts’ Target: | $13 |
| Analysts’ Targets | |
| C.L. King & Associates | $11 |
| Strong Buy | |
| Friday, June 13, 2008 | |
| Roth Capital Partners | $13 |
| Strong Buy | |
| Friday, June 13, 2008 | |
| Lehman Brothers | $16 |
| Buy | |
| Thursday, June 12, 2008 |
Benihana Inc. (BNHN, rated BUY)
Diversification Can Be Everything
July 8, 2008
James Picerno submits:
Diversification isn’t everything, but it’s a lot. And sometimes, it’s everything.
It doesn’t take much analysis to recognize that asset allocation’s value has risen sharply this year. More precisely, the right asset allocation has generally made the difference between losing a lot of money and either losing a little or even turning a profit this year. Even a passive asset allocation across the major asset classes has generated potent benefits. Indeed, the year-to-date performance numbers for the major asset classes midway in 2008 are wide ranging, as we noted last week.
Diversification Can Be Everything
Weekly Market Outlook: July 7th - July 11th
July 8, 2008
Matthew Bradbard submits:
Life has been good if you have been long just about any commodity for the last year or so, but you know things are getting out of control when oil magnates in the Middle East are paying as much as $1 MIL for customized license plates. That being said, a variety of commodities are looking heavy and with the G-8 warning that we are “entering the danger zone” and with potential for a dead cat bounce on the dollar, we would recommend tightening up stops on your longs and step aside looking for commodities to back off short term. This will set up a nice long entry for several commodities from corn to cotton. Continue to monitor oil and the dollar as most commodities are keying of their direction.
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