Sunday, January 11, 2009

Earnings Week of 1/12/09

Another Sunday, another look ahead at the week in earnings. This week is still rather slow but there are a couple of Dow components in there so things are about to get underway in earnest. Here's the table:

Spreadsheet Link

Monday: AA starts off the party this week, after the bell. They've already announced pretty drastic personnel cuts and have taken a hit this past week. Historically, AA has not been volatile at earnings with the dramatic exception of last quarter when the max intraday move was -19.8%! And for a Dow component at that. Right now the contracts are being priced for a move to 9.50 on the downside. I'm inclined to avoid this one because something about it seems "off" for lack of anything more quantitative to say. Downside support would be at the SMA(30)/(50) at 10.15/10.24 respectively and below that around the 9.40-9.50 area. One note of trivia: the Friday closing price equates to a Dow contribution of 1.035%, so even if this tanks don't expect it to do much damage to the Dow.

Tuesday: INFY and LLTC. ADRs have long bothered me from the perspective that they are not really beholden to the same rules as direct lists on NYSE/NASDAQ. Whenever I've watched them closely around earnings it's always seemed like someone knew something. Anyhow, while certainly disclosure rules haven't prevented Enrons here in the US, the information was there if anyone was so inclined to actually pay attention. However, look at SAY this past week. Oops. For that reason, I try to avoid any and all ADRs since they always feel gamed. As for LLTC... semiconductor/chip industry and so I take a pass.

Wednesday: Nothing made it through the parameter filter.

Thursday: DNA announces after close. Looking at their chart is intriguing to say the least. It would appear that it has moved into breakout mode on high volume on Friday after breaching the 85 level, apparently on news/rumor of a Roche buyout around $95+/share. This stock has been moderately volatile at earnings, typically moving 3-6% but not much more than that. So while I would say that a strangle here doesn't make much sense, it is worth paying attention to as a straight momentum play if it turns out this rumor has any substance. INTC has already offered lowered guidance this past week and was smacked down a bit. It's currently sitting right at the SMA(30/50) 14.26/14.19 and if those levels fail it could eventually slide down to the 12.50 area. However, this is another case where a strangle makes little sense on the assumption that a lot of the news is already priced in. MI rounds out Thursday. The daily chart is pretty ugly with a move on Friday to 11.37 that is just about as close to failure as you can get. Plus, the volume ticked up a bit there. Ouch. MI has only once been as volatile as the options contracted pricing implies so again, best avoided as an event play but might be worth a watch as a short.

Friday: FHN and JCI. One could argue that FHN is at the bottom of a slightly upward sloping channel. What that means for reaction to earnings is tough to say. It has a decent sized float with moderatly high short interest around 15%. The contracts are pricing for a large downward move... I'm going to take a pass on commenting on this one. JCI intrigues me but considering this is an op-ex week and they announce on a Friday, this will also have to remain without comment (for now). Maybe I'll re-visit it on Wednesday or Thursday since the levels around the current price look like it could be a winner.