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By Tim Melvin
2:34 p.m. EDT
The report out of
this morning was horrible. Sales were down 30% and earnings fell 94%. The truck and engine manufacturer also lowered its guidance for 2009 to $2.80 to $3.10 a share. The previous guidance was for $5.10 to $5.60.
The press release called the current economic conditions for the industry the worst since 1962. CEO Daniel Ustian added that the recovery was going to take longer than expected.
I have to confess I am impressed the company has remained profitable. They have taken advantage of the bad times to gain market share and expand their military business.
The shares do appear to be ahead of themselves in trading today. The stock is up more than 2.5% so far today. The multiple of falling earnings is a tad high for my taste at almost 15 times the estimate.
As analysts adjust their estimates down from the previous $4.09 level the stock may weaken from these levels. It might be a good time for long-term holders to sell some near-term calls.
2. From Russia With Crude
By Howard Simons
2:28 p.m. EDT
Both Russian stocks and the ruble came back after February as a logarithmic function of Urals crude oil delivered to Northwest Europe.
That logarithmic part is key: The huge kick in Russian stocks off the low and off of crude oil prices will start witnessing diminishing returns unless crude oil prices remain on an early 2008-type of run. I think we are headed higher in crude oil still, but not at that pace.
An indirect beneficiary of the Russian rebound is Switzerland. Why park your money in a cold, drafty Moscow bank when you can park it in a Swiss bank? The connection here is surprisingly direct and applies to money coming out of hot, dusty banks in the Middle East as well.
3. Men's Wearhouse Beats
By Gary Morrow
1:14 p.m. EDT
reported its first-quarter results last night. The company beat consensus EPS by 11 cents and guided second-quarter EPS higher. As a result, the stock began the day with a breakout gap higher open. After the initial surge, the stock faded a bit only to gain more strength before blowing past the open print and on to new 2009 highs.
Men's Wearhouse is now up over 15% and is trading above heavy resistance near the $20.00 area. Volume is extremely heavy in the early going at double the daily average. By the close, today's trade level will be second only to the March 12
for the current year.
The breakout today begins a new leg higher for Men's Wearhouse. The stock had a powerful move off the March lows that doubled the share price. After losing steam just above $20.00 in late April, the stock began a healthy pullback to work off the overbought condition. Men's Wearhouse held support near its 200-day during this process as volume contracted. This action has laid a solid foundation for an upside move, and yesterday's earnings report supplied the catalyst for a convincing surge.
Strong support is in place from the May highs of $19.70 down to last week's highs of $18.90. On the upside, I expect the stock to test its September 2008 highs of $26.00 in the next few months.
4. Near-Term Currency Targets
By Marc Chandler
12:23 p.m. EDT
In choppy trading, the dollar is being sold to new lows for the session as Europe closes. As expectations of a
hike are unwound, the dollar appears poised to return to the lows seen last week.
Euro: $1.4070 then $1.4135. The risk is for a test on the $1.4335 level seen last week, with support near $1.3950 to $1.3970.
GBP: Sterling remains stellar, retracing more than 50% of a 8.5 cent decline. Next target is $1.6334, then $1.6450 and $1.6660. Also remains well supported against the euro.
JPY: The near-term risk extends toward JPY96.65 and possibly to JPY96.00.
By Tom Graff
10:38 a.m. EDT
just announced five-year and 10-year new bonds, and the spread will probably wind up around +340, something like 20 basis points wider than its old 10-year issue (which I own). I still like energy over other sectors and every day that oil rises, I like energy all the more.
Note that Anadarko recently did an equity offering, which is music to bondholder ears. I added some
Long APC and COP bonds.
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This article was written by a staff member of RealMoney.com.