Earnings Season

by Larry Levin


Today was yet another yawner as the market hardly traded at all. The NYSE adv/decline volume was the lowest in many, many WEEKS (maybe months) with barely 50% of the recent average. Although the volume was pathetic, the Dow and S&P500 both managed marginal gains. Normally such a collapse of volume as the market continues higher is an ominous sign of a reversal; however, this time may be different. After all, market participants were waiting on the kickoff of earnings announcements.

“Everyone’s waiting to see how earnings and guidance for the third quarter will shape up,” said Patrick Becker Jr., chief investment officer at Becker Capital Management in Portland, Oregon, which has $2.3 billion under management. “There’s a huge tug-of-war between those who think the economy is slowing and those who think we will have growth in the second half of the year.”

In a Bloomberg interview, Mr. Gaul agrees and says, “We are in a neutral trading environment as we are waiting for earnings season to start,” said James W. Gaul, a money manager at Boston Advisors LLC in Boston, which oversees about $1.9 billion. “We had a massive rally last week and now we’re waiting for the next piece of meaningful news. We will be looking for a combination of earnings growth and forward-looking comments.”

Sadly, Mr. Gaul doesn't elaborate with an explanation of what the "meaningful news" was that caused the "massive rally." Of course, the Bloomberg interviewer didn't bother to ask.

In the after-market the ES is making new highs with the just announced better than expected earnings from Alcoa. MarketWatch puts it this way - Alcoa Inc late Monday said it swung to a second-quarter profit on lower costs and stronger aluminum demand. The company also raised its 2010 forecast for global aluminum consumption. Alcoa reported net income of $136 million, or 13 cents a share -- matching the profit analysts polled by FactSet had estimated. A year ago, Alcoa lost $454 million. Revenue rose 22% to $5.2 billion from the year-earlier quarter, topping the consensus analyst target of $4.97 billion. Looking ahead, Alcoa raised its forecast for global aluminum consumption to 12% from 10%. Alcoa shares are down 33% so far this year, the worst performance by any of the 30 Dow components. The stock closed Monday at $10.87 a share.



Previous Day's Trading Room Results:

Trade Date: 7/12/10

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


1) Engf buy @ 11:48am at 1072.75 = -.25 (1 lot)

2) Algorithm positions (6)

3) “Reading the Tape” positions (3) combined Secret’s, Algo, & “Reading the Tape” total -0.25



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