Top Takes From RealMoney

The RealMoney contributors are in the business of trading and investing all day on the basis of ongoing news flow. Below, we offer the top five ideas that RealMoney contributors posted today and (if applicable) how they played those ideas.

Apple: All Dressed Up, but No Place to Go

By Alan Farley
7:32 a.m. EDT

Apple ( AAPL) reports third-quarter earnings results after Monday's close. The stock has recovered from the 2008 crash in a U-shaped pattern, which has brought the price back up to the May 2008 high, around $193. It's spent the last two weeks at that level, in a holding pattern ahead of its eagerly awaited results.

Unfortunately, this is perfect spot for the stock to start an intermediate correction that drops price down to $150 or so. Even a report that blows away expectations might run into major trouble, because the all-time high is sitting just 10 points above the 2008 high, near $203.

These twin resistance levels, along with "round number resistance" at $200, mark significant barriers that are unlikely to be mounted until 2010, at the earliest.

Positions: None

Bank Earnings

By Tim Melvin
10:16 a.m. EDT

I am watching the bank reports very carefully, and so far I do not like what I am seeing. Almost across the board, banks of all shapes and sizes are reporting that loan losses continue to grow at a somewhat alarming rate. The BB&T ( BBT) story is a major headline, and while the bank's basic business is doing OK, the credit problems are getting worse. I do like the fact that loan-loss reserves for the quarter were more than charge-offs. I consider under-reserving to be a major red flag.

I have gone through several smaller bank reports this morning, and it's a common theme. Loan losses are rising, as are delinquencies at the majority of banks I have looked into so far. There is going to be a need for more equity offerings in this group to protect balance sheets in my opinion. The small bank trade is setting up exactly as I expected so far.

A notable exception to all this is Bank of Marin ( BMRC). These guys know how to run a bank. The report is required reading for bank stock investors.

Positions: None

GOOG - The Results Show

By Timothy Collins
11:04 a.m. EDT

Just following up on the Google ( GOOG) spread trades that I posted prior to earnings. They were:

Long 1 Oct $510 call, short 3 Oct 550 calls, long 2 Oct 570 calls for a cost of $7.

This trade came in well beyond my expectations, and with the close basically at $550 for the stock, this spread was cashed out for a few pennies shy of $40. In essence, this trade made the most that it could make.

The other trade was Long 1 Oct $510 call, short 3 Oct 540 calls, long 2 Oct 560 calls for a cost of $4. This trade also finished profitably at $10, fall short of the prior, but still a nice finish for less than two weeks worth of holding time.

Positions: None

PEP

By Jim Cramer
1:45 p.m. EDT

Pepsi ( PEP) is down today with Coca-Cola ( KO) due to report. I think that PEP should be bought, because KO should talk about a cessation in the cola wars.

Positions: Long PEP

Broad Rally for the Dow

By Gary Morrow
3:56 p.m.
In the last hour, the DJIA has held onto a 100-point rally. There are only three Dow members -- JPMorgan Chase ( JPM), General Electric ( GE) and Microsoft ( MSFT) -- that are negative at this late stage in the day. All three are down just fractionally.

The gainers are being lead by Caterpillar ( CAT), which is up over 5% and is way ahead of the rest of the index. While overall volume is relatively light, Caterpillar is attracting heavy pre-earnings trade.

Caterpillar began the day with a gap higher open that lifted it to new highs for the year. The early pop took out heavy resistance near $54.50 where the stock had left behind multiple weekly highs over the past six weeks. This area is now solid support and will likely hold future damage to a minimum, at least through this earnings season.

CAT Daily (NYSE) -- Caterpillar
Cat Daily Chart
Source: TradeStation

I expect some supply to hit the stock near $60.00, but I expect a strong report to help power Caterpillar to further gains.

Positions: None

This article was written by a staff member of RealMoney.com.

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