Earnings Season

Yep, Monday is kickoff time for the 1Q 2010 earnings season with Alcoa [AA] leading the charge.  Over 60% of the S&P will report in the next three weeks and my belief is that any “meet or beat” on earnings and sales will send a stock higher as the market ignores the fact that these numbers are so low, even a snail could crawl beneath.  But this is definitely not an endorsement to buy any stock specifically for an earnings play as no one ever can project exactly how the market will react even to the best of earnings.  So I guess my point  to this post is to warn you of overall market swings, keep your stops in place and expect the irrational exuberance to continue.  My projection is now Bullish on the S&P for another leg higher to $1200; possibly the 200wk SMA near $1235

2 thoughts on “Earnings Season

  1. I think many companies will beat earnings. Last year, almost all companies dramatically cut costs to compensate for lack of revenues. Now we are nearing expansion and recovery, look for those sales to grow. Earnings is definately a short term catalyst to not only drive a stock upward, but downward as well. If Alcoa beats earnings, I feel this will drive the Dow upward tomorrow. In the end, earnings is still risky business…

    • AA tends to be a barometer for the overall market 1Q and yes, they *lost less* than expected by cutting costs and inventory. Sales going forward [guidance] is going to be key in my mind as they cannot cut costs forever. This may be why many are expected a relatively flat-to-slightly up year as recovery will be long in coming. The biggest tool for the Bulls is that the market is forward looking; the market is not the economy so any above-expectations news I believe will drive it higher at this point; at least until the end of 2Q. Thank you for your comments and best of luck in 2010.

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