Markets look like they are getting ready to break higher. Will the Alcoa earnings kick off a 3rd quarter earnings craze like Intel did last quarter? At first blush it would seem so. Of course the market sees what it wants to see right now.
Take the Aloca earnings. Revenue up from last quarter 9.5% from $4.6 billion to $4.2. Solid sequential growth. But wait, prices were up 18.3%. So what does that mean? Probably sequential volume decline. So the buyers of this stuff (everyone else who will be reporting earnings) are buying less which should mean they are selling less. Of course this also means their input prices are going up which should mean tighter margins. Now whether this is true or not, don't expect Wall St. to care and if it gets reported don't expect it to get seen. Alcoa for its part is up 7% after the bell. Aluminum prices have been dropping since mid August. Hope that reverses for those guys. But Alcoa is cheap right? Well umm. Even if you double analysts earnings estimates for next year (which I believe is $.50) they are trading at a 15X forward earnings multiple for a highly cyclical company. So analysts have to be 100% wrong and the stock is still expensive. I don't have a position but if I did I would be short and be getting killed. Just like every other company that makes sense to short and I continue to get killed. Either way, I just beat my head against the screens day after day watching what doesn't make sense keep making even less sense.
As far as the markets tomorrow, barring a massive bad jobless claims numbers, we could be seeing new highs.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment