"Never let the future disturb you. You will meet it, if you have to, with the same weapons of reason which today arm you against the present." --Marcus Aurelius Antoninus, Roman Emperor ( 121 A.D.-180 A.D.).
It always baffles me when a well-known and popular CNBC personality, Jim Cramer, makes woeful predictions about the stock market. On a recent "Mad Money" episode, Cramer tried to influence his viewers' outlook on some well-known stocks. See the video here.
Yes, you heard him correctly if you listened to it. "People want to make bets this week!" he blurted out. Then he said, "This is the single worst week of the year--it happens 4 times--this is the single worst week to make a bet [on stocks]. Cramer claims to have done a giant 10 year study to come to this conclusion. Let's look at a 5-year chart of the broader S&P 500 index. I've included the 50-day and 200-day moving averages for perspective .
Yes, this is obviously a critical inflection point, with the broad, major S&P 500 stock index right at or slightly below its 50-day moving average. Again, please take a cleansing breath and remember, the most powerful "Market-Makers" also anticipate how each day of next week's stock market sessions will begin and end. They will exchange "cues" with the major news networks (all owned by huge, publicly-owned conglomerates like Disney (DIS), Newscorp (NWS) and Viacom (VIA) who'll then "spin" the headlines accordingly.
It's the "Biggest Week for Earnings" Show All Over Again
It began on Sunday, April 22nd, with the results of the big French election for president that's getting gobs of media hype. By golly, on Monday we have some big earnings releases and press conferences from three companies that should be on our wish-lists.
We should be as curious about Netflix (NFLX) and Texas Instruments (TXN). Both have a lot to prove, but of the two I'd focus on TXN. TXN evidently is a major supplier to Apple (AAPL), and there are some investors that believe "as goes TXN, so goes AAPL". I'm not sure that's true, but what TXN reports will definitely impact its share price.bIf TXN disappoints even a little, it may sell off, allowing traders a chance to buy some shares at its recent $31.60 low or even lower.
We all saw what happened to another Apple supplier, Qualcomm (QCOM), after its recent revelations. Take a look at the company's sorry 5-day chart.
On Tuesday we'll hear from yet another Apple supplier, Arm Holdings (ARMH) which sells at a bloated forward P/E average of over 32. Arm designs microprocessors (microchips), physical IP, and software. The company sells and develops tools to enhance the performance of high-volume embedded applications.
I'd consider buying TXN, which pays a 68 cent annual dividend, and also QCOM before I'd touch ARMH. Its share price may be massaged higher if the company exceeds earnings expectations by a large degree, but its tenuous.
Tuesday after the close, AAPL must exceed all expectations to keep its shares bubbling. The 3-month technical chart looks rather dicey to me.
Before the market opens Tuesday 3M (MMM) will announce its earnings results, which should go well. MMM has raised its dividend for 54 consecutive years.
That said, if MMM disappoints or gives insipid forward guidance, it could sell off and test its April 10th low of $84.44 per share. The 6-month chart helps us to see what a nice run MMM has had in 2012.
Notice the volume bars, which indicate to me that the big players sold out of MMM back during the March 16th high of $90. That day we saw the volume spike above 5 million shares versus the 3 million share daily average. This reminds me to remind us all to watch volume on days when a stock hits a new multi-month or 52-week high. If it soars, it probably means the "smart money" is taking some profits and so should we.
Wednesday we'll see two Dow Jones Industrial Average names, Boeing (BA) and Caterpillar (CAT). BA may have a chance to give a good report, but if it disappoints, the April 10th low ($70.59) may be tested.
Don't Forget the Fed Meets April 24th and 25th
Before we mention another stock, we all better be paying close attention on Wednesday the 25th when the FOMC meeting adjourns. What the Fed says in the after-meeting statement better be encouraging and give a glimmer of hope for some kind of a QE3. If they don't, the last two hours of trading on Wednesday may be as ugly as the Wicked Witch of the West.
Thursday the 26th we hear from energy emperor Exxon Mobil (XOM). Since XOM controls a lot of the natural gas business, we may all get a peak at the prospects for this component of the energy sector.
We also hear from Amazon (AMZN) and rumors abound that it will barely meet if not miss its earnings. A chance to buy low? Maybe! Another Thursday announcement involves footwear favorite Deckers (DECK). Boy, does this stock look cheap! No debt, wonderful earnings growth and revenue growth to boot. (see its Key Statistics).
Deckers' Total Cash last quarter was an impressive $264 million. It's also trading at less than 2 times its sales and a 5-year expected PEG ratio of only 0.70. If it doesn't suffer from "stinky feet", this may be a good buy.
Friday the 27th won't be a "sleeper". International Paper (IP) will report in the wee hours of the morning. The company may mention its Temple-Inland acquisition has turned out to be accretive to earnings. Dividend-booster Procter & Gamble (PG) will be closely watched as it tells its latest story. Did its restructuring pay off? How's earnings growth going from a year-over-year perspective. Will a stock sell-off ensue?
Last but not least we'll hear from "high-flyer" VF Corp (VFC). With its many apparel brands like North Face and Timberland, expectations may be too high and the companies "Current Ratio" may be too low. Too much debt? VFC trades close to its 52-week high, and it wouldn't surprise me that between now and November 30th, we see the stock price closer to $130. Let its 1-year chart with moving averages be a caveat emptor:
So spruce up your buying wish list and let's see if the most prominent market forecasters are correct about next week's headline stocks.
Disclosure: I am long COP.