A lot of the action on Monday took place after the regular trading session ended. Intel Corp. (INTC) and Yahoo Inc. (YHOO) both fell sharply after hours when they failed to meet analysts' expectations. INTC dropped 9% to $23.10, while YHOO hit $34.70 with a 13% price decline after missing estimates by just a penny a share, while their revenue, excluding distribution fees, came in at forecasted levels. INTL missed by 3 cents a share. IBM also missed estimates, but it chopped back and forth a lot more instead of plummeting like INTC and YHOO. Additional news on IBM came in the announcement of a Securities and Exchange Commission probe into its expensing of equity compensation for the first quarter of 2005.
There still isn't much intraday that is great for forming a correction up off this selling. A strong downside gap into the open seems likely at this point, however, and since we've had several days of gradual selling this could be enough to flush out the weak hands. As a result, I'll be looking mainly on the long side out of the open and hoping we see an open into some strong support, such as the 200 sma on the larger intraday time frames like the 60 and 120 minute charts or the 50 day moving average. It the market starts moving back up in the premarket ahead of Wednesday's open it will take away some of the impact, so trading near premarket lows before the open would be ideal.
Economic Reports and Events
Jan 18: Core CPI and CPI for Dec. (8:30 am), NY Empire State Index for Jan (8:30 am), Net Foreign Purchases for Nov. (9:00 am), Crude Inventories 1/13 (10:30 am), Fed's Beige Book (2:00 pm)
Jan 19: Building Permits for Dec (8:30 am), Housing Starts for Dec (8:30 am), Initial Claims 01/14 (8:30 am), Philadelphia Fed for Jan (12:00 pm)
Jan 20: Mich. Sentiment-Prel. for Jan (9:50 am)
Earnings Announcements of Interest
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stock's earnings date before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing
Jan 18: DOX (A), AMR (?), AAPL (A), ASNL (2:00 PM), CIT (B), CNB (?), EBAY (?), FHN (A), HCBK (A), HBAN (B), HTCH (A), JPM (B), MEL (?), NTRS (?), PH (10:00 AM), QLGC (A), RDN (A), STX (A), LUV (B), SPSN (A), STT (B), STI (B), SNV (?), TCB (?), BK (B), VCP (B), WM (A)
Jan 19: BBT (B), BZH (B), COF (A), CMA (B), CREE (?), DHI (B), FFIV (?), FCS (B), FSL (A), GNSS (A), HDI (B), HYSL (A), IGT (?), NITE (B), MER (?), MCHP (A), MOT (A), NFB (?), NVS (B), PFE (B), RMBS (?), SFA (A), SLM (B), UNP (?), UNH (B), WB (B), XLNX (?)
Jan 20: AT (?), C (B), GE (?), JCI (B), KEY (B), RF (B), SLB (B)
Jan 23: AXP (?), ACF (A), ARBA (A), AV (A), BAC (B), CBST (A), ET (A), ETN (B), F (B), MSPD (?), PPC (B), SKM (3:00 pm ET), TXN (A)
Jan 24: MMM (B), ADTN (?), AGR (?), AAI (B), AKS (?), BJS (?), EAT (B), BNI (B), CA (?), CTX (A), CKFR (A), COH (B), GLW (A), CSX (?), DD (B), EMC (B), EXTR (A), GDW (?), HMA (B), JNJ (B), KMB (B), LAB (B), LXK (B), LU (B), NFLX (?), NOC (B), PPP (?), RFMD (A), RYL (A), STLD (?), STM (A), SUNW (4:30 pm ET), NYT (B), TMA (A), TDW (B), UTX (B), ZION (A)
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.
Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.