Sunday, February 22, 2009

Earnings Week of 2/23

Here's the weeks' earnings spreadsheet:

Spreadsheet Link

Well, my comment last Sunday about picking a wrong week to stop drinking turned out to be a nice call. And the comment about nervousness. The remark about "apparent market optimism" was based in part on my SPX indicator, and its consistent upwards trajectory into what is "risky" territory despite what I (and a bajillion others) see as major fundamental deterioration. This trend has continued and continues to puzzle me. My own 2 cent analysis on SPX is that there is going to be a more significant test of the November lows. Yes, SPX got close to it on Friday but not with any great volume or duration. The market is still in a state of floating free from reality and totally subject to the vagaries of the programming schedule of CNBC and misty outlines of bank rescue programs that totally aren't nationalization even though we can't tell you what. Good times. Moving on to the earnings announcements...

Monday: Cons. staple CPB and high-end retailer JWN. CPB is sitting on the lower Bollinger on the daily chart with all the major MAs (except 200) tangled up in the 29.50-30.25 range. The options are pricing in a move below the 52-week low which seems a bit pessimistic for a company like this, even in such an environment. On the flipside, JWN has a high short interest and sells little of any necessity to anyone. It's resting more or less on its last support until 10.25 area and then the November lows. I'll be curious to hear what they have to say about the last quarter and looking ahead.

Tuesday: A whole slew of large and interesting names. Speculative solar play: FSLR. HD announces, go back and read last week's post on earnings with reference to LOW. Nearly-bankrupt department store M. My own 2 cent analysis of M goes like this: a few years ago, M looked around the competitive landscape and decided that they were the weak hand in that space. However, credit was cheap and so they decided to purchase most of their competition. Now fallen are Foley's, Marshall Field's (a reason I detest Macy's), and a handful of others. But, as a result M is now saddled with tons of debt, regions full of customers with no particular affection for the brand, and contracting consumer spending. Contrast this with Best Buy, which now has one less competitor courtesy of CC going bankrupt. And they didn't have to spend a penny to do it! Market share growth at a great price. Moving on: TGT, VNO, and WYNN. If I remember correctly, VNO is the 2nd largest component in DJUSRE, which moves SRS. WYNN... well, it's just been a funny stock to watch in the last few months.

Wednesday: Budget retailer DLTR. Last time out for them, I said this is an environment they should excel in. EPS estimates have not changed for them in the past quarter. Retailer LTD has been hit and I believe is closing stores. Last quarter, CRM moved 20%. TRLG has had occasional quarters of large movement. Finally, GRMN deserves a mention to see how many people bought their gadgets at Christmas.

Thursday: Tech heavyweight DELL. Anecdotally, the Dell catalog/mailers have had some smoking deals lately. On a more data-driven note, computing equipment was one of the sectors that notched a double-digit drop on the last PPI report even as it showed moderate price inflation. DECK, producer of Uggs. KSS interests me not so much as a play but for what they say. Same goes for GPS, particularly in regard to any further store closing plans. They had announced some last time out and any further contraction there is going to really pound the mall-owners. See GGP for exhibit 1 on how that group has been getting pinched. Finally, SWY just to hear their views on basic staple spending and potential shifts in patterns.

Friday: Speculative football SNDA. That's about it.

There are lots of companies out this week with high short interest and digging into the spreadsheet will help find them. Again though, I've reserved specific comments for the same reason as the last few - it is near-impossible to guess where the market will be in 3 hours, never mind 3 days. BAC and C are still looming large despite Ken Lewis' protestations that all is well. Timmy Geithner's stress tests will supposedly get underway, though honestly, I kind of expect this to be an exercise in technical reassurance, with all the detail of a pre-indictment Bernie Madoff audit. The notion that these guys really don't know, after a year of intense stress, if BAC/C/whoever could topple is either laughable or frightening. Hence my inclination to view this as a "show-trial" except instead of the firing squad at the end, the goal is to pump the markets. We shall see...