This Day On The Street
Continue to site
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: What Mr. Market Has Told Me

1. FedEx (FDX - Get Report) dropped its worldwide growth forecast, but I was left wondering if the market believes this is enough. Despite a world of mega cost cuts, the stock didn't zoom on an event that was very hyped

2. Wal-Mart (WMT - Get Report), under the radar, downwardly revised its expectations in key international markets and joined the list of companies calling out Japan -- you know, they do matter -- as a new source of risk.

So, I ask: After hearing these comments, do I pick up some Whirlpool (WHR) on a pullback on the assumption that the U.S. housing recovery will offset (throwback: decouple) the economic storms continuing to brew overseas? Come on, guys, let's take a hard look in the mirror -- a mirror not covered in steam from the shower.

Honest Abe's Early-Innings Earnings-Season Lesson List

I'm totally all for buying a stock -- when I can remove a couple of these talking points from the Honest Abe list.

  • View with skepticism the opinion that China's economic growth will reaccelerate in the fourth quarter. The reads I am receiving is that China is becoming worse, and there is no benefit in consumer demand or business demand from infrastructure projects or liquidity injections.
  • If you could find a "Yum-Yum" stock, by all means grip it and rip it. Yum! Brands (YUM - Get Report) had a bunch of intangibles that converged that propelled its stock price, including concerns on McDonalds's (MCD - Get Report) hurting sector sentiment and uber worries on food inflation. To be a "Yum Yum" stock, the company has to have unjustified skepticism on its fundamentals derived from clear (emphasis on clear) sales and leverage catalysts.
  • The dot-connecting is largely skewed toward avoiding potential disasters, rather than unearthing opportunities. By this I mean that the commentary has been so poor, and earnings downgrades so alarming, that the search is on to exit companies that will trumpet these same tunes, as opposed to buying companies that may be doing decently.
  • Yum! Brands is the early outlier; earnings news is being sold.
  • Not one company I know of has mentioned anything related to the latest Federal Reserve efforts, but they've definitely intensified the rhetoric on the fiscal cliff -- most notably in Wal-Mart.
  • You will lose money earned in the summer rally if you fail to think on a granular level with regard to China. If growth is slowing, there is a big chance a company you own is not pushing through price increases, is discounting more merchandise, and is not moving as much product at cheaper prices as it hopes. This triggers a chain of events that impacts near- to medium-term operational performance. A good example is why a company like Caterpillar (CAT) would be cutting production -- its inventory is not in line to demand trends, and that inventory has to be worked down.

Honest Abe Also Says: If earnings season is "priced into" the market, the SPDR S&P 500 (SPY) will land buying near the key support level that is poised for a test. Watch it.
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


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs