Emotions and Volatility Rule The Street As Earnings Season Creeps Up
Earnings season, only a week away, will be the last thing on investors’ minds this week as they continue to focus their attention on the credit crisis. The stock market will likely continue to move in wide swings as emotions, instead of fundamentals, rule the Street.
However, a few earnings reports will trickle out this week ahead of the unofficial earnings season, which starts on October 7, when Alcoa Inc.
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PowerRating) releases results.
On Monday, Circuit City Stores
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PowerRating) will release its fiscal second-quarter results before the bell. Last week, the stock fell to its lowest level in 22 years after the company shuffled its top management, and said it expects results for the quarter to be “slightly better” than earlier forecasts of a loss, from continuing operations between $170 million and $185 million. That figure excludes any one-time charges.
The stock favors a narrowing of its share move in the regular trading session following a pre-market earnings release, doing so six out of the past nine quarters MidnightTrader.com has tracked. On June 19, the stock rose 2.7% in the pre-market after reporting a narrower-than-expected first-quarter loss and missing on sales. The stock reversed in the regular session, ending lower by 1.7%.
On Wednesday, Micron Technology
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PowerRating) will release its fourth-quarter results after the closing bell. The memory chip maker is expected to report a loss of $0.22 per share on revenue of $1.55 billion. As of August 26, the stock had a short ratio of 6, which represents the number of days it would take for the short-sellers to cover their positions based on the recent daily volume of the stock. If this stock has a bounce, shares could move high very quickly in a short-squeeze situation, so shorts should get out in after-hours trading if shares are trending higher.
In the near-term, the stock has a widening trend, with more vigorous, same-direction next-day trade in all of the last four quarters. On June 26, shares fell 1.5% in after-hours trading after Micron reported a wider-than-expected loss and beat on sales. The stock tumbled in the following regular session, sinking 13%.
Cassie Slane is a Senior Editor at www.MidnightTrader.com.