Top athletes have long been quoted as finding a "zone" that leads to the achievement of unimaginable feats on the field, course or court. I'm no RG3, but I'm reasonably athletic, so I can completely relate to the "zone." It's as if time stands still. You are unaware of surroundings, and there is this effortless execution on an action that yields serious success on a public stage. Just thinking about this nirvana makes me excited. As someone who made financial services his life, I have learned that the "zone" is easily found in the world of studying markets and stocks. I am currently operating in one of these zones -- one I would characterize as having ideas emerge from a mystical black hole, and where the winning views and calls outnumber the duds that send the phone ringing off the hook.
Another aspect to this #StockZone is the freakish ability to start up a conversation with Mr. Market, and gain a ton of useful feedback in return for your time.
What Mr. Market Has Told Me
Alcoa's (AA) earnings are apparently so meaningless that perhaps the SEC should consider banning the company from issuing them. Obviously, this is said tongue in check. But hello, people -- Alcoa's earnings were initially billed as a "solid beat," the stock popped and then realty set in that there is more behind an "expected" 1% production cut (thanks, China). The stock closed lower, leaving me to wonder -- as I hypothesized last week -- about the third-quarter health of companies that placed orders with Alcoa. It also had me wondering whether weakening corporate fundamentals will see stabilization by the fourth-quarter earnings season in January 2013.
To purchase Alcoa shares on a dip, or most industrials with similar business models and exposure to Europe and China, it's a both a physical and a mental bet that the severity of sales pressure and fleeting cost/expense leverage will level off. Pardon me if I don't want to drink the Kool-Aid yet. What commenced as a medium-sized snowball has picked up speed and size, as seen in commentary and actions by executives. Come take a tour of the fun tidbits I grabbed on Wednesday.