A Slew of Earnings

Buckle Up for Action

By Bryan Bottarelli
Monday, April 23, 2007 10:44 AM EDT
Mon, 23 Apr 2007 14:44:00 GMT

Dear Bottarelli Research Member,

A slew of critical earnings reports are scheduled to begin tomorrow — and I’m quite certain that the strength (or weakness) of these reports will dictate the market’s next major directional move. Here’s a quick look at the major companies on tap to report numbers this week:

Tuesday: Northrop Grumman (NOC – NYSE), DuPont (DD – NYSE), AT&T (T – NYSE), and Burlington Northern Santa Fe (BNI – NYSE).

Wednesday: Apple (AAPL – NASDAQ), Lockheed Martin (LMT – NYSE), Boeing (BA – NYSE), ConocoPhillips (COP – NYSE)

Thursday: 3M (MMM – NYSE), Exxon Mobil (XOM – NYSE), Valero Energy (VLO – NYSE), Halliburton (HAL – NYSE), Dow Chemical (DOW – NYSE)

Friday: Chevron (CVX – NYSE)

As you know, we’ve been holding longer-dated LMT June 100 Calls (LMT FT) as we wait for Lockheed Martin to break out of its recent “soft” trading range and re-test the $102 level. Perhaps a strong opening number from sector peer Northrop Grumman tomorrow followed by an equally strong number from Lockheed on Wednesday can kick-start LMT shares back up into triple-digits.

LMT

Also making a strong up-move today is NASDAQ Stock Market (NDAQ — NASDAQ) on the heels of an upgrade by Goldman Sachs. As you know, we already took a nice 55% profit on our NDAQ June 30 Calls (NQD FF) last Friday — but if you’re still holding these calls your gains are ever better. Take your money and run — and I’ll look to re-enter more NDAQ calls on any near-term weakness.

NDAQ

At the same time, NYSE Euronext (NYX – NYSE) is falling this morning due to a downgrade by Goldman Sachs. Now a few things are happening here. First, rumors are swirling that NYX earnings (which are due to be reported on April 26th at 8:00 EST) have leaked — which promoted an early bail-out of NYX stock by those insiders privy to this information. (It wouldn’t surprise me if some longstanding NYSE floor traders had an inside connection to the accountant finalizing the upcoming earnings numbers). Second, rumors are also swirling that Goldman simply wants to get their clients into NYX for a cheaper price. Although this is nothing but hearsay, it does seen odd that GS would downgrade NYX while upgrading NDAQ. Hmmm.

NYX

To be honest, the whole $3.20 down-move (taking the stock right to its 50-day moving average) looks rather strange to me — and it has unfortunately stopped us out on our NYX May 95 Calls (NYX ES). Nevertheless, I’ll continue to follow the play for anyone willing to hold these calls into this week’s earnings. After all, a good number on the 26th and this position could be back to profitability in the blink of an eye.

In terms of new trades, I’d like to see how today’s opening session action settles in before initiating any new trade candidates. So until then…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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