Digesting Reality

• January 16, 2002
• Dave Floyd

I will only be
posting abbreviated columns for the remainder of this week — full coverage will
resume on Tuesday Jan. 22.

Get ready, it
is shaping up to be an interesting day.
The market is digesting some reality today, Intel
(
INTC |
Quote |
Chart |
News |
PowerRating), J P
Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating) and a slew of other earnings reports, resulting in the
market looking for the “silver lining.” Last I checked, it was coming
up empty.

I am not saying anything real
insightful here, but as a result of developments, intraday volatility has picked
up noticeably in the last few sessions. The key has been to stay with stocks
that are in “play.” Good candidates have simply been stocks which
surprised on the earnings front. Looking at today’s session, it is reasonable to
expect that J P Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating) will be in play, as well as Intel
(
INTC |
Quote |
Chart |
News |
PowerRating).
I am still being incredibly selective. The market still demands patience and
discipline, and shooting from the hip is still a low-probability approach.

A couple of stocks which I highlighted
in my column on Monday
as longer-term plays, Household International
(
HI |
Quote |
Chart |
News |
PowerRating) and Capital One
Financial
(
COF |
Quote |
Chart |
News |
PowerRating) are out with earnings. Needless to say, they reported
record earnings for the quarter yet if one really gets into the numbers, there
are some disturbing trends developing: delinquency rates up, operating expenses
up and credit losses also showing signs of increasing. Don’t be fooled by the
headlines, roll up your sleeves and look objectively at the numbers that
companies report.

Key
Technical Numbers

As always, feel free to send me your
comments and questions.  See you in TradersWire.

Dave