For the second session in a row the Dow eclipsed the 12,000 level, but unlike Wednesday, optimism on the earnings front fueled by another batch of better than expected reports was enough to close the blue chip index above its latest milestone. However, with a 13th consecutive quarter of double-digit profit growth having already been priced into stocks, coupled with the cautious tone that typically accompanies the start of earnings season, market gains were minimal.
A 1.5% rebound in oil prices was among the most noticeable excuses for taking some money off the table and preventing a more convincing rally in equities. After closing at their second lowest level this year, Saudi Arabia backing OPEC's first expected production cut in two years helped oil prices rebound to finish at $58.50/bbl.
While higher oil improved the Energy sector's prospects of generating strong profit growth, investors still had to contend with the absence of leadership from two of the most influential S&P 500 sectors -- Financials and Industrials -- and didn't get upside support from Technology until the closing minutes of trade.
Technology has been a focal point all week and was under the microscope well before the opening bell sounded. Last night, Advanced Micro Devices (AMD 21.57 -2.66) topped Wall Street forecasts but posted a significant decline in margins, which weighed on semiconductors all day. Fortunately for the bulls, all was not lost since Apple Computer (AAPL 78.81 +4.28) posting a 27% year/year rise in Q4 earnings. A 6.7% drubbing on Dell (DELL 23.05 -1.65) was the sector's biggest blemish but that was the direct result of market erosion tied to Apple's record-setting Mac sales and a report showing that Hewlett-Packard (HPQ 39.59 +0.58) passed Dell as the leader in global PC shipments.
With regard to Financials, a Q3 earnings miss from the third most heavily weighted S&P 500 constituent -- Citigroup (C 49.74 -0.45) -- provided investors with a reason to lock in some of the sector's recent gains. Washington Mutual (WM 42.31 -1.40) badly missing expectations due to continued net interest margin compression from an inverted yield curve and further deterioration in Treasuries that lifted bond yields across the curve also prompted some consolidation.
The Industrials sector was in focus after Honeywell (HON 41.58 -1.05) beat expectations for a fifth straight quarter. However, a warning that a slower global economy could limit next year's growth left Honeywell as the day's worst performing Dow component (-2.5%). That in turn overshadowed a better than expected Q3 report from United Parcel Service (UPS 75.25 +2.84) which claimed that it expects "solid" Q4 holiday sales.
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1.
HC - HANOVER COMPRESSOR
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 10-20-06 |
|
Long |
Above 15 high |
Sell 1/2 once risk covered |
Below LOD at time of setup |
|
|
* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 19.97
|
2.
ATW - ATWOOD OCEANICS
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 10-20-06 |
|
Long |
Above 15 high |
Sell 1/2 once risk covered |
Below LOD at time of setup |
|
|
* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 46.36
|
BAX - BAXTER INTL
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
|
|
Long |
Above 15 high |
Sell 1/2 once risk covered |
Below LOD at time of setup |
|
|
* did not setup.
|
CNI - CANADIAN NATL
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 10-19-06 |
|
Long |
45.21 |
45.70 |
Below 44.60 |
up to + 34 cents per share (45.55) |
|
|
EAGL - EGL INC
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
|
|
Short |
Below 15 low |
Cover 1/2 once risk covered |
Above HOD at time of setup |
|
|
* did not setup.
|
ETR - ENTERGY CORP
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 10-18-06 |
|
Long |
84.81 |
Reached (85.05) |
Below 84.94 |
up to + 72 cents per share (85.53) |
|
|
CHRW - C H ROBINSON WORLDWIDE
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 10-18-06 |
10-19-06 |
Short |
41.60 |
Reached (40.69) |
Closed above 41.60 |
up to + $1.72 per share (39.88) |
|
* 10-18-06 - Stock gapped up.
|
ICE - INTERCONTINENTAL EXCHANGE
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 10-17-06 |
|
Long |
82.66 |
84.00 |
Below 80.07 |
up to + 46 cents per share (83.12) |
|
|
==============================
EOD = End of day.
LOD = Low of day.
PDC = Previous Day's Close.
S/R = Support/Resistance.
==============================
DISCLAIMER: Trading in securities may not be suitable for all individuals.
Consult your broker or other professional to determine your suitability.
The discussions provided by Day Trading It are for educational purposes
only and should not be taken as a recommendation to buy or sell the
referenced security. Past performance is not indicative of future results.
Please keep in mind that these picks are chosen up to 12 hours before the markets open. During this time conditions, which will effect entry and exit on the above listed ideas, may change.
