Economic news will continue to take a backseat this week with earnings dominating the tape. We’ll see home price data that could keep housing’s rally intact. Plus, we’ll hear from the FOMC about interest rates. Given the chatter from Fed-heads the past month, don’t expect anything different; rates should stay the same (as in next to nothing) for the foreseeable future.
What’s in Store This Week?
As we said, earnings will again hog the spotlight, with around 160 S&P 500 (SPX) companies, or a little less than a third, due to report their numbers. Sectors with a high percentage of reports include:
Insurance: MetLife (MET), Allstate (ALL), Aflac (AFL)
Basic Materials: Dow Chemical (DOW), DuPont (DD), Praxair (PX), U.S. Steel (X)
Real Estate: Simon Property Group (SPG), Boston Properties (BXP), Host Hotels & Resorts (HST)
Utilities: Southern Co. (SO), Dominion Resources (D), FPL Group (FPL), American Electric Power (AEP)
Health Care: Humana (HUM), Coventry (CVH)
Retail: RadioShack (RSH), Office Depot (ODP)
Semiconductors: Texas Instruments (TXN), Xilinx (XLNX)
Machinery: Caterpillar (CAT), Cummins (CMI)
Autos: Ford (F), Goodyear (GT) and O’Reilly Automotive (ORLY)
Transports: Norfolk Southern (NSC) and UPS (UPS).
Defense Contractors: General Dynamics (GD) and Northrop Grumman (NOC)
Companies to Watch
Let’s look at a few of these earnings reporters that are on our radar for potential Winning Edge trades. The table below includes a slice of the action this week, with earnings report dates and what analysts currently expect for profit growth (compared to the same quarter a year ago). We also include a relevant moving average so you can see potential support or resistance (duration in days is in parentheses).
We give an idea of the overall sentiment toward the stock based on our various indicators. Keep in mind that optimistic sentiment represents higher expectations and, thus, can create some vulnerability if those expectations aren’t met. Conversely, pessimism reflects lower expectations that often lead to upside earnings surprises.
And we’re adding the Earnings Risk Index (ERI) score. This proprietary filtering tool ranks stocks from 1 (most bullish) to 5 (most bearish) based on a number of technical, sentiment, and earnings-related factors. ERI is an added benefit for Winning Edge subscribers, as we now send out reports on changes in ERI scores, especially for stocks that became “1s” or “5s.”
Here’s the table for next week. (Note that these names report no earlier than after the close on Tuesday, which gives you time to do some research before making a pre-earnings play.)
The standout here is REIT Boston Properties (BXP), which earned an ERI score of “1,” and could be a good candidate for some call buying.
Related Articles:
- 6 Option Trades on ETFs for the Global Recovery
- 5 Rules of Engagement for Trading Earnings
- 12 Keys to Trading Earnings for Profits
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