Sunday, March 22, 2009

Earnings Week of 3/23

Here's the week's earnings spreadsheet:

Spreadsheet Link

Once again, for the readers that are out there, I apologize for not putting up some better (or any at all, really) posts though I have been keeping up with the NYMEX charting which has been pretty interesting for those that keep up. Last week, I actually had a couple of decent selections: first, GES did jump nicely despite no forward guidance. Second, DRI was a good play and cranked out a big gap and move. It seems that earnings plays are slowly becoming more attractive as the IV premiums have shrunk back a bit from the levels that generally made these strategies rather unattractive for the last couple of months.

It also would appear that for the moment, the bulls lack the conviction of various pundits out there telling everyone that stocks are cheap, cheap, cheap and you should buy, buy, buy! While I could perhaps tolerate some of that talk when SPX was sub-700, now that the index has run up so much, those multiples are again pushing on expensive territory. However, keep in mind that earlier charts on this blog have shown that multiples do NOT have to come down to what is generally considered "value" territory in order for a bottom to be put in. Instead, EPS needs to recover and that is the current unknown. Just beware of the people prattling on about the Fed model for valuation. That you can have outright manipulation of Treasury rates through the QE activity of the Fed constituting a sound basis of comparison seems a bit... odd. But that's just me.

Enough of the blather... here's the earnings rundown for the week:

Monday - FMCN, TIF, & WAG. FMCN's IV is so out of whack it seems virtually impossible to turn a profit from a long strangle unless you plan on holding it until next op-ex and get lucky on the long side. Similarly, TIF has never made a move like the options are priced for. They interest me from the consumer discretionary aspect of things. How much are people cutting back in the most discretionary of purchases - jewelry? Just like the rest of the market, TIF peeked above the 50 day MA and looks to be headed back down. I'd guess 19.50 would be the next stop but ultimately, the 17.50 area could be in reach. WAG might have an outside chance but also seems low odds.

Tuesday - CCL, DB & WSM. DB deserves no comment except to note that they were a HUGE recipient of taxpayer dollars routed through AIG. So huzzah for them I guess. You can believe their statements at your own risk. It's all theatre of the absurd and far too opaque. CCL isn't worth the attention. WSM constitutes another discretionary store in my mind because you can buy all the stuff they sell at TGT, albeit lesser brands. Crazily though, WSM is almost in breakout mode having breached the $10 line and has moved quite a bit in the last two quarters. This could be worth a look, particularly on the long side if the market doesn't completely fall apart around it.

Wednesday - Only RHT deserves any attention because it jumped +16.8% last earnings announcement. It is very close to the top of a channel and has a chart very similar to DRI's bullish one from last week. I'd guess a move above 16.25 could send this one blasting. A bad reaction probably means 14.75 first and then if things get really ugly to 13.25 or so.

Thursday - GME catches my eye. It took a beating last quarter at earnings time. However, I'm looking at it in a way similar to GES. It has never moved enough to the downside to profit on the options pricing on a 1:1 contract basis. However, a long weighted play could be more interesting as the day grows closer. We're still in a situation where there is no telling where SPX will be in 3 days. But, it's sitting just below the 30/50 DMAs and I'd guess that a pop above those could let it run to the mid-28 level. TXI looks priced to perfection on the downside but has some wiggle room on the upside with the next resistance probably around 20.86. Again, this has to be watched since Thursday is far away.

Friday - KBH. Stay for the laffs maybe?

That's it for this week.