DJIM #15 2008

A new form of entertainment maybe sweeping through America and it's called the 'Conference Call' of America's once mighty.  Nothing is more entertaining than listening to money managers peeved off at CEO's of giants like Bear Stearns and now GE!.  The blame came is on as the only way to make yourself not feel guilty for blowing your clients lots of money is to blame another.   That is what is happening and the only way for us to avoid any blame is to do what we have always preached and that is stay out of stocks heading into earnings.    We are bringing this up today because this is the week it all really kicks off and we are not going to screw our portfolio advances in the past month by rolling the dice.   If these so called value managers did not foresee the potential problems of GE in their financial, health care etc, why we would bet on companies we know much less about and what encompasses their business.   It's not worth it,  we 're traders and we will react to earnings not bet on them.    To us these companies are only symbols, nothing more.     As usual, we're not here at DJIM to analyze the past, even if the past is really the present with GE's wipe out still the topic of conversation 72 hours later, but we've been all tattooed in the media and all the noise is rehashing the pessimism we're all used to.    Instead of looking at this as the 'bombastic' news!, we noted the market was looking for last week, (unfortunately negative bomb),  we'll look at the wipe out as a positive when it comes to earnings this week.   Why?  The pessimism and the lowered expectations may bring great volatility if some stocks of size report surprising numbers as stock prices lowered in the aftermath of GE, we may get the herd running wild to these names and GE may quickly be forgotten as some stocks may look cheap once again heading into earnings, eg AAPL.    Still, no matter what occurred in the broad markets, our concentration, our niche was holding up incredibly well early Friday and if you got the jitters, your exit door was in front of you near Thursdays closing prices.     If you've decided at some point you lived through enough turbulence the past 6 months or so, Friday was just another day.   The bias has turned once again and another downtrend maybe in the cards if the financials and techs do what is expected and that is give no positive "surprises".    The reports don't get going till Tuesday AH's and that gives two full trading days of a possible bounce being played out, we'd use this as an excuse to let go of some positions if you felt stuck with anything Friday or just want to lighten up.    The SPX will probably test 1320 before any reflex action happens from these March close levels, so a further drip would not surprise early on.    If we see no hope of this level holding this week, we 'd start to imagine this selling spreading to the resource, commods' at some point for the short term and therefore we will simply clean out any exposure we have for the time being and let this play out. 

As far as our 'shadowlist', we'd just add a mix of financials back like JPM, MS, LEH to gauge the sentiment.  We'd replace a FMCN following last weeks guidance and add EDU with EPS this week.   Not much else to tweak on the list as we were quite happy with our niche last week.   A note.. some earnings dates in our link are not confirmed like MELI's,  so as a rule,  if something interests you should always double check for yourself with any stock.