Sunday, February 21, 2010

BAGAKOAA February 21, 2010 Last weeks scorecard


February 21, 2010 Last weeks scorecard and the week ahead.

I started to write this about three times and something always interrupted. Let’s go back to last Monday night and see what was prognosticated.

I had the Empire State mgf index coming in at 25. It actually came in at 24.91. That was a healthy jump and as indicated the news coming from the debt ladened EuroZone kept what could have been an exciting rally in check. Last Tuesday the S & P only went up about 1.8%. As I suggested the VXX got a little play, but by the end of the week I got out and got all other portfolios out of the VIX tied etf. This looks like some stable times and head so look for the VIX to head south of 30.

Now for the earning reports from last week and my grading my guesses. As suggested KFT was looking for a good report over 50 cents a share. They came in a very healthy 48 cents a share. As I indicated it needed something well over 50 cents to get the stock moving. It didn’t happen.

WM as suggested here did blow through the 48 cent whisper number and as it needed 50 or more to get some legs on the stock, hit 52 and the stock went from 31.70 to 33.40 over the week. A nice little trip if you had the stock.

I mentioned that housing starts needed to be above 590 thousand to keep the good time rolling and they came in at 591 thousand units. Good enough to keep the rally going. To keep it going further, as described here I thought the industrial production report would be positive and it was. All of this positive news knocked the VIX down and by Wednesday night I had all of the VXX ETFs pulled from all accounts.

NetApp got me so excited I took a new position when they reported 40 cents a share when everyone was looking for 28. I am taking a very short term position on this for about 15 days looking for about 7% gain. Then I will set in some stops and see what happens. This is a very healthy looking stock but I need to do more homework.

Well I didn’t get HPQ right. I figured with all the good banter about pc sales and chip market being strong the HP would fly though the 1.05 a share estimates, they came in at 1.04 which disappointed.

The producer price index did what was excepted and took more worry out of inflation.

I really missed the boat on Dell. Again, on all the good news about the pc sector and Dells great server business I was confident we would see 32-33 cents a share. They reported 17 cents a share which was pitiful and wet blanket for most of the tech sector.

Well on WalMart I was right and wrong. They blew away the estimates of 1.12 a share earning 1.22 a share for the fourth quarter. However they did so on cost cutting citing slow sales. Now sales can be down for tonnage or it can be down for pricing or it can be both. Other retail companies cited surprising strong, not robust, but strong sales. Traffic was strong at WMT according to the people who count bodies. Could it be WMT slashed to deep with the holiday pricing? That would be my guess. Still a nice 4th quarter. They had a couple of negative forward looking statement that put a damper on things.

The CPI or Consumer Price index did not bring any surprises and indicates that inflation is not a worry. Core inflation even went down a tenth of a point. So in a nutshell it was a calm week not a wild ride.

So what does next week look like.

Keep an eye on Bernanke as he speaks on Monday on the subject of employment and the need or lack of need for more stimulus. It should not be a market shaker but could be an interesting segment.

Consumer confidence reports on Tuesday and though we are coming off historic lows, I don’t think we will see much improvement. There is still a lot of mediocre news out there. The number will come in at 56 a point above consensus but still yucky.

Watch out Wednesday for new home sales. My guess is they will disappoint. Consensus is about 360 thousand units. My guess is 348 due mostly to bad weather and the government stimulus is confusing builders and buyers. Also On Wednesday Bernanke speaks again this time in his usual appearance before the parliament of whores, oops I mean congress. This should not be anything earth shattering and nothing to move the market.

OK I am going out on a limb here and I have a good feeling about the durable good orders on Thursday. The consensus number is a 1.5% increase over December. High end estimates are 3.6%. I am thinking 3.1% is where the number will come in.

Friday is a busy day with Consumer Sentiment, Existing Home Sales, GDP report, and the Chicago PMI report. Keep an eye on the GDP report for a nice surprise. Consumer sentiment should be positive as well.

What will be moving the market next week will be earnings and I have been doing some homework on the reporting that is coming this week. I will leave you with a couple that are reporting tomorrow and then get back to you on the balance.

Look for Lowes to beat the 12 cents a share estimate and come in at 14.cents a share. It has been trading sideways since November. Look for 14 cents to kick start this home improvement monster. HD will follow on Tuesday with good earnings. (hint, buy an August just in the money call option on Monday.) Campbell’s reports on Tuesday and will probably meet or exceed the 74 cents a share estimate, but it is one of those stocks that is expected to do well every quarter. Look for 74 to disappoint. 70 to make everyone dump the stock and it will need 80 plus to make it move. And on Tuesday we have Nordies reporting. The whisper number is 81 a huge jump from last year (36). I think we are a bit early for the high end luxury stores to do that well. I am thinking a slightly disappointing 75 cents a share. If that happens look for the stock to drop to 34.50 which is a nice entry point.

Ok that be enough tonight. If you’re not tiered of reading I am tired of writing. Buenos Noches and Salve Lucrum.


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