Every week RS gives a prediction he ha snot been wrong once. G o to his site www.rightside.com and have a look.
My Fearless Prediction for the Week – Twelve Dow components report their third quarter earnings results this week. My prediction that at least half will trade lower in reaction to the news.
The Dow Industrial Average reached a new all time at 14,198.10 last Thursday, and in last week’s RightSide Free Weekly I showed resistance at that level.
Even though the Dow reached a new high, both Alcoa (AA) and General Electric (GE) traded lower following their earnings reports last week, so the Dow Earnings Scorecard reads 0 Wins and 2 Losses.
By the end of this week we should see that solid gold earnings are built into Dow 14K for the second quarter in a row.
Chart Courtesy of Reuters
Monday, Oct. 15
Citigroup I has already warned and the stock situated just above its 50-day simple moving average at $47.18 with the 52-week low of $44.66 set on August 16, just before the FOMC cut the discount rate. The stock rates a buy according to ValuEngine with fair value at $59.31, so the bad news appears priced in.
Tuesday, Oct 16 Intel Corp (INTC) just can’t get above $26.50 and ended last week below its 50-day simple moving average at $25.71. Perhaps there’s a price war beginning for chips, as semiconductors have been clearly lagging. The SOX is 11.3% below its July high and ended last week below its 200-day simple moving average at 488.30, and with a head and shoulders top in the daily chart pattern.
IBM Inc (IBM) reached a new 52-week high of 121.46 on Thursday and the 50-day SMA is $115.00. IBM is 19.5% overvalued so a better than expected earnings report is factored into share price.
Johnson & Johnson (JNJ) reached a new 52-week high of $66.80 on Oct. 3 with the 50-day SMA at $63.33. Fair Value is $65.12 so the stock is trading where it should.
Wednesday, Oct 17 Altria Group (MO) is also trading between its 50-day SMA at $67.84 and 52-week high at $72.00.
JP Morgan (JPM) is rated a buy according to ValuEngine with fair value at $54.00. The stock trades between the 50-day SMA at $45.62 and the 200-day SMA at $48.67. I am worried about the financials as they fund many types of real estate related loans. There are additional time bombs ticking for big banks but they may not have reached the balance sheet for the current quarter. It JPM increases it Loan Loss Provisions they are telling you that more issues are coming.
Coca-Cola (KO) is another Dow component between its 50-day SMA at $55.56 and 52-week high at $58.33. Good news is factored in as KO is 11.5% overvalued with fair value at $51.82.
United Technologies (UTX) is also between its 50-day SMA at $76.23 and 52-week high at $82.50. Good news is factored in as UTX is 5.3% overvalued with fair value at $76.27.
Thursday, Oct 18 Pfizer (PFE) is rated a buy with fair value at $30.33 so the stock is 16.7% undervalued. PFE is trading between its 50-day SMA at $24.53 and its 200-day SMA at $25.71.
Friday, Oct 19 3M Company (MMM) is 10.2% overvalued with fair value at $85.48 with the stock trading between its 50-day SMA at $90.30 and the 52-week SMA at $97.00.
Caterpillar (CAT) is rated a buy but is 8.1% overvalued with fair value at $74.30. The stock is between its 50-day SMA at $76.88 and the 52-week high set last week at $82.74.
Honeywell (HON) is 21.7% overvalued with fair value at $50.69. The stock set a new 52-week high on Friday at $62.29 and it’s above its 50-day simple moving average at $57.49.
Last week I predicted that the PHLX KBW Banking Index (BKX) would stay below its September 19th high of 112.19 and its 200-day simple moving average at 113.57. Then “Beware of the Ides of October” as the deluge of earnings reports begin for more than 1000 FDIC-insured community and regional financial institutions.
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