This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Sozzi's Day Ahead: Sure Smells Fishy

"Why is the market telling me it's conflicted?"

My Take: Shares of Alcoa (AA - Get Report) have charted an interesting path since the company's July 9 earnings report. The stock fell July 10, bottomed July 25, rose 23% from that point till Sept. 14 and has since shed 8%. Beginning Sept. 14, Alcoa shares have lagged the iShares MSCI Emerging Markets Index (EEM), which is important, since Alcoa still sounded fairly bullish on emerging markets back in the second quarter. The stock has also lagged the SPDR S&P 500 (SPY) and the SPDR Dow Jones Industrial Average ETF (DIA).

On Oct. 3, Alcoa was able to hold the 50-day moving average on decent volume. Still -- and not to be a Debbie Downer -- take notice of these facts. Transport stocks are issuing earnings warnings while Alcoa's shares have been hanging tough. Meanwhile aluminum-can users Pepsico (PEP - Get Report) and Coca-Cola (KO - Get Report), both with their own emerging-market exposures, have seen shares trade beneath their 50-day moving averages since Sept. 12 and Aug. 22, respectively.

I think the other stocks mentioned here are flashing the yellow caution light that should be coming from Alcoa. The fact that this name is not sending out such signals leaves me hesitant as earnings season commences. I would have arrived more confidently had the market reined it in again last week, but we saw the exact opposite take place, and potentially misguided enthusiasm is running as wild as Hulkamania.

The market, in my opinion, requires more than a sea of earnings beats coming in $0.01 above estimates as top-line figures lag below consensus for another quarter. In order to justify what we have witnessed in the past five days, companies will have to exit the gate showing improved revenue results on a sequential basis, as well as stronger bottom-line beats. It's a tall order, no?

Honest Abe's Employment-Report Quickie Take

A bunch of facts and figures were tossed around after the jobs report, and not too many folks explained why the market ultimately sold the news into the close. Here is Honest Abe's brief assessment.

If you drill into where the jobs were created in September, it was in construction -- which is good to see -- and, to a lesser extent, in retail. There wasn't much spill-over into other sectors that make "stuff," such as many components in manufacturing, transportation and financial services (outside of credit origination). Basically, then, the report revealed hiring fears out of human-resource departments.
At the time of publication, Sozzi had no positions in the stocks mentioned, although positions may change at any time.

Brian Sozzi is Chief Equities Analyst for NBG Productions. In this capacity, he is responsible for developing independent financial content and actionable stock recommendations (including ratings and price targets) for an institutional and retail investor base. In addition, Sozzi is the Editor in Chief of the "Decoding Wall St." investor education online platform.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free

Markets

Chart of I:DJI
DOW 17,701.80 -128.96 -0.72%
S&P 500 2,056.01 -19.80 -0.95%
NASDAQ 4,752.9060 -52.3850 -1.09%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs