The Top of the Line

by Larry Levin

Although the market took an early nose dive from a higher gap open, after some chop it reversed. Until the very end of the day this rally was slow and choppy, but a rally nonetheless. Even with several periods of massive selling the markets were able to continue the rally. The only thing I can think of that would explain it is program trading in NY. Will it continue tomorrow? Who knows but ever since my MOB level held, the market has been rallying higher.

Momentum is all that matters because top line growth sure doesn't. Many companies are trading higher on horrendous numbers, especially top line revenue. Here is a list of some biggies:

1. Coke (KO) - $8.27B in revenues vs estimates of $8.66B. A $400MM MISS.

2. Caterpillar (CAT) - $7.98B in revenues vs estimates of $8.86B. Nearly a $1B MISS.

3. DuPont (DD) - $7B in revenues vs estimates of $7.15B. A $150MM MISS.

4. United Technologies (UTX) - $13.2B vs estimates of $13.92B. A $700MM MISS. In fact, the CEO said he "...does not expect a substantial economic recovery next year."

There are many more.

These numbers do not make up green shoots or real earnings in any way. The top line revenues have fallen off a cliff and show the true pace of economic contraction. Any "good news" being reported is the result of cost cuts, which are great for the short-term only.




Previous Day's Trading Room Results:

Trade Date: 7/21/09

E-Mini S&P Trades*
(before fees and commissions):

1) Engf sell @ 10:00am at 948.75 = b/e (1 lot)

2) VA buy @ 10:40am at 946.50 = -.75 (1 lot)

3) VA sell @ 2:00pm at 946.75 = +.25 (1 lot)

4) Algorithm positions (11)

5) "Reading the Tape" positions (2) ...combined Secret's, Algo, & "Reading the Tape" total...+10.50


Electronic (YM) Mini-Dow:

1) None today



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