300 gallons of radioactive water spilled into the Sea of Japan yesterday and that can only lead to one thing:
Godzilla!
That's right, the king of the monsters was spawned by just such an event and shareholders of CCJ ran in terror yesterday, giving us the best buying opportunity we've had in months on one of my favorite stocks. While the company has some real issues with the shutdown of one of a major mining project due to flooding, it is not a long-term issue and the small dip in uranium futures (caused by CCJ's announcement that they have avoided a possible strike and expect the mine to be delayed by less than one year (2011, rather than late 2010).
Kelvin Chan points out that short selling has run up to 6.2% on CCJ, who are scheduled to report on 7/31, haven't issued a warning and are selling Uranium that is 280% more than last year's Q2 average of $42 – have fun with that play shorties! Coincidentally (yeah, right), there was also a rumor floated that CCJ was going to buy Paladin, who have already denied what is looking more and more like a pre-earnings attempt to flush people out of the stock as it consolidates for a run over $60. We are already long with a double on our Jan $55s but I did take the opportunity to buy out my callers yesterday and even added more contracts rather than panic with the rest of the crowd.
All the world's markets are currently poised in Monster Breakout Mode and rolling right into the goals I set back in May, when we updated the big chart:
|
|
|
Day’s |
Must |
Comfort |
Break |
Next |
|
Index |
Current |
Move |
Hold |
Zone |
Out |
Goal |
|
13,950 |
43 |
13,000 |
13,300 |
13,500 |
14,000 |
|
|
3,036 |
-13 |
2,800 |
2,900 |
3,000 |
3,250 |
|
|
1,549 |
-2 |
1,470 |
1,505 |
1,530 |
1,550 |
|
|
10,188 |
-32 |
9,400 |
9,800 |
10,000 |
10,250 |
|
|
2,698 |
-9 |
2,525 |
2,550 |
2,600 |
2,750 |
|
|
530 |
1 |
480 |
490 |
500 |
560 |
|
|
848 |
-7 |
810 |
830 |
850 |
900 |
|
|
23,057 |
103 |
20,250 |
20,750 |
21,000 |
22,000 |
|
|
18,217 |
-21 |
17,400 |
17,700 |
18,300 |
18,500 |
|
|
15,289 |
-21 |
13,500 |
14,100 |
14,725 |
15,000 |
|
|
8,031 |
-87 |
7,300 |
7,600 |
8,000 |
8,200 |
|
|
6,072 |
-52 |
5,750 |
6,000 |
6,100 |
6,300 |
|
|
6,649 |
-48 |
6,400 |
6,550 |
6,600 |
7,000 |
Asia was more or less flat this morning as Japan took a pause to recover from yesterday's earthquake with insurance stocks (of course) leading a mild Nikkei decline. CEO had strong earnings and rose 3% in the Hang Seng as the company seeks to make a clean double since Jan '06. Watching how they handle 120 will be a very good guage of investor sentiment in the oil majors.
Some other stuff happened in Asia and something might be happening in Europe but we really don't care today because we have so much going on over here we can hardly think straight! Earnings are going to come hot and heavy this week and the reactions we get here will likely set the tone for all of earnings season so… no pressure boys:
| Stock | Symbol | Record Last 10 | Average Beat | Notes |
|---|---|---|---|---|
| Tuesday: | Beat- In Line – Miss | % | ||
| Coca-Cola | KO | 9-0-1 | 2.5 |
|
| Johnson & Johnson | JNJ | 9-0-1 | 3.3 | Disappointing |
| Merrill Lynch | MER | 10-0-0 | 16.3 | Canary for Brokers |
| Wells Fargo | WFC | 3-6-1 | -0.4 | Beat by $.01 in 2 of last 3 |
| Yahoo | YHOO | ? | ? | Can things be worse? |
| Wednesday: | ||||
| Intel | INTC | 6-1-3 | 1.0 | Look out if they break $26 |
| Altria | MO | 6-3-1 | 0.9 | Killing us Softly |
| JP Morgan Chase | JPM | 9-1-0 | 5.4 | Beat last 9 |
| United Tech | UTX | 9-0-1 | 3.6 | Hasn't Missed since 1997 |
| Ebay | EBAY | 7-1-2 | 1.3 | Show me the $ Meg! |
| Thursday: | ||||
| Bank America | BAC | 9-1-0 | 5.1 | Big Pop if no problems |
| Ford | F | 5-4-1 | 8.0 | Are they still here? |
| GOOG | 10 -0- 0 | 10.5 | Law of large what? | |
| Johnson Controls | JCI | 6-1-3 | 1.9 | Can they go higher? |
| Motorola | MOT | 8-1-1 | 1.9 | Can they go lower? |
| IBM | IBM | 8-1-1 | 5.0 | $120 – right Cramer? |
| Microsoft | MSFT | 7-1-2 | 1.6 | Zune sales? |
| Friday: | ||||
| Citigroup | C | 6-4-0 | 4.8 | Got 'em |
| Caterpillar | CAT | 6-3-1 | 2.0 | Stll a bargain |
MER posted strong numbers this morning but JNJ was not so hot and that makes me very nervous. Still if MER is an indicator, a play on the beaten down XLF Aug $36s for $1.30 may be in order. WFC just announced in-line earnings that offset what turns out to be manageable sub-prime losses. There were warning signs though – Like most other major lenders, Wells Fargo encountered more loan problems in the quarter as higher interest rates on home loan and rising gas prices made it more difficult for consumers to pay their bills on time. Wells Fargo's loan losses totaled $720 million in the second quarter, a 67 percent increase from $432 million at the same time last year. USB missed on similar issues.
We also have earnings we'll be watching from ABT, ALL, AMD, AMR, BLK, BK, BRCM, BSX, COF, CSX, CX, CY, DAL, DJ, ERIC, FDC, FSL, GCI, GILD, HOG, HSY, IGT, JNPR, JPM, KMP, LUV, MEL, NE, NUE, OO, PFE, PNC, SLB, SNDK, SOV, SPWR, STI, STX, UNH, UNP, WB, WHR, WM, WYE and XLNX so this should be lots of fun!
We also have tons of data as well as Uncle Ben testifying before Congress but at least the core PPI gives him some ammunition to tell our representatives that inflation is just something they heard about from their parents. Briefing.com says:
| Date | ET | Release | For | Actual | Briefing.com | Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jul 17 | 08:30 | PPI | Jun | -0.2% | 0.2% | 0.1% | 0.9% | |
| Jul 17 | 08:30 | Core PPI | Jun | 0.3% | 0.2% | 0.2% | 0.2% | |
| Jul 17 | 09:00 | Net Foreign Purchases | May | $126.1B | $72.0B | $80.3B | $84.1B | |
| Jul 17 | 09:15 | Industrial Production | Jun | 0.5% | 0.4% | 0.5% | -0.1% | 0.0% |
| Jul 17 | 09:15 | Capacity Utilization | Jun | 81.7% | 81.5% | 81.6% | 81.4% | 81.3% |
| Jul 18 | 08:30 | CPI | Jun | 0.1% | 0.1% | 0.7% | ||
| Jul 18 | 08:30 | Core CPI | Jun | 0.2% | 0.2% | 0.1% | ||
| Jul 18 | 08:30 | Housing Starts | Jun | 1460K | 1450K | 1474K | ||
| Jul 18 | 08:30 | Building Permits | Jun | 1500K | 1490K | 1520K | ||
| Jul 18 | 10:30 | Crude Inventories | 07/13 | NA | NA | -1462K | ||
| Jul 19 | 08:30 | Initial Claims | 07/14 | 315K | 310K | 308K | ||
| Jul 19 | 10:00 | Leading Indicators | Jun | -0.1% | -0.1% | 0.3% | ||
| Jul 19 | 12:00 | Philadelphia Fed | Jul | 13.0 | 14.0 | 18.0 | ||
| Jul 19 | 14:00 | FOMC Minutes | Jun 28 |
The core PPI was up .3%, much hotter than expected but the non-core was down .2% on falling gasoline prices so we'll see if the perma-bulls suddenly start favoring the headline numbers AND TELLING US THE CORE DOESN'T MATTER! It actually is a good number because most of the increase in the core came from automobiles, which were up 1.4% as car makers terminated key fleet discount arrangements with rental companies. Industrail Production and Cap Utilization were great and Net Foreign Purchases were a nice surprise at $126Bn, but that was during May, as the dollar rose – June and July may be another story.
Brent crude is dropping while NYMEX oil is rising and Phil Flynn is running out of ways to pump the prices so it should be an interesting week. ZMan says the easy oil party may be over and we are very excited about tomorrow's upcoming live energy report so tune in!
I don't expect to break 14,000 without some sort of "venting," as Happy likes to say so let's stay light on our feet and keep our eyes wide open as truly anything can happen in this wild earnings and data week.
Whether we have a meltdown, temporary or not, or whether we go radioactive and stomp on the bears will most likely be determined this week. Usually I say that the market will decide how to interpret earnings regardless of the actual numbers but this quarter I think the market is very much looking to read the tea leaves of our corporate reports. Until we get a clear picture, let's keep a level head, tighten up our covers and be ready for anything!
