Alcoa Inc. (NYSE-AA) is recently down 30 cents to $37.70.
AA call option volume of 53,011 contracts compares to put volume of 14,940 contracts. AA May 37.5 straddle is priced at $2.90. AA May option implied volatility is at 57; June is at 47, above its 26-week average of 42 according to Track Data, suggesting larger risk.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Alcoa (NYSE:AA) is recently down 27c to $34.50. AA call option volume of 8,138 contracts compares to put volume of 735 contracts. AA May option implied volatility of 40 is near its 26-week average according to Track Data, suggesting non-directional risk.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Goldman Sachs (NYSE: GS) sure is a downer. I was starting to feel a little better about the market when it decided to say some bad things about the upcoming earnings season. Thanks a lot, Goldman! According to this Bloomberg article, Goldman believes that earnings for companies will be, overall, very bad, and that the broad market will be brought down by them. Already, reports by General Electric (NYSE: GE) and Alcoa (NYSE: AA) have rocked Wall Street -- and not in a good way, let me tell you. Goldman's David Kostin is, in fact, disagreeing with other analysts who believe that the quarter won't be so terrible; he also thinks the S&P 500 will be lower by the end of the year by perhaps 6%.
So, what does this tells us as investors? First of all, let me say that I think the guy has a point -- when you see GE miss like it did on 4/11, you've got to take notice and be on your guard. In other words, if you're planning on doing some cute buy-a-stock-just-before-it's-about-to-report trading, be extra careful! Now is not the time to take ridiculous chances with investment capital. If you are going to do it, make sure you do it with extra-safe stocks -- then again, if GE wasn't a worthwhile trade in the category I just described, what the heck qualifies for "extra-safe" this quarter? Probably not much. All of us have to realize that the recession is, most likely, real, and that stocks are going to be difficult equities to own.
Stock futures were lower this morning, indicating the beginning of what could be another down day on Wall Street as more troubling news from the financial industry was reported, while UPS warned of a slowdown in its delivery business.
On Tuesday, U.S. stocks ended lower following a revenue warning from Advanced Micro Devices (NYSE: AMD), a lackluster earnings report from Alcoa Inc. (NYSE: AA), a dividend cut from Washington Mutual (NYSE: WM) and the Federal Reserve minutes, all of which affecting investors' sentiment. The Dow industrials closed 35 points lower, or 0.29%, the S&P 500 lost 7 points, or 0.51%, and the Nasdaq Composite dropped 16 points, or 0.68%.
This morning, given the very light economic calendar consisting of February wholesale inventories at 10:00 a.m. EDT, the Street will likely focus -- once again -- on the troubles in financials. The top story on the Wall Street Journal is about the options the Fed is considering to alleviate the credit crunch further including "contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail." While such plans aren't surprising and even welcome, the report comes after the Fed showed concern the economic downturn could last into 2009 when it released Tuesday the minutes of its FOMC meeting.
Beware Charging at the Supermarket Supermarkets have long employed tricks aimed at luring shoppers into spending more, such as doling out free samples or stationing the most expensive sugar cereals right at a toddler's eye level. Now, as shoppers struggle to get their escalating grocery bills under control, the credit-card companies are throwing one more temptation their way: grocery store rewards cards. Here are the three things you should consider before applying for a grocery rewards card. Plus: the three best rewards cards today. Grocery Rewards Cards Often Aren't Worth It - SmartMoney.com
Futures were negative this morning, indicating U.S. stocks could start the day lower after Monday afternooon aluminum giant Alcoa kicked off earnings season with a dismal report while AMD warned of a revenue shortfall. All this ahead of some housing data, something that hasn't helped market sentiment a while now.
On Monday stocks started strong following a report Washington Mutual could get a $5 billion cash infusion and with the Dow industrial registering a triple digit point gain at some point. But that has quickly fizzled out and worries over the upcoming earnings season took over. The Dow industrials ended the day with a 3 points rise, the S&P 500 added 2 points while the Nasdaq Composite lost 6 points.
What investors are likely focusing on this morning is earnings from Alcoa (NYSE: AA). The aluminum giant Monday after the close that first-quarter earnings took a nosedive, plunging 54% to $303 million. Operating earningson a per share basis missed analyst estimates by 4 cents when it came in at 44 cents per share. Alcoa beat revenue estimates though. The main squeeze on profit margins were issues investors should get used to seeing this earnings season: higher energy costs, lower dollar and lower demand domestically. AA shares were down over 1.1% in premarket trading.
The day every investor waits for/dreads has finally arrived. Earnings season has just been kicked off as the first of the Dow Industrials, Alcoa Inc. (NYSE: AA), has just reported first-quarter results. This quarter, the results have been anticipated/feared more than usual. With many economists saying the U.S. has likely entered a recession in the first quarter, corporate profits may be next to be hit.
Well, Alcoa alleviated some fears and confirmed others. The aluminum giant posted a first-quarter profit of $303 million, or 37 cents a share, down from $632 million, or 75 cents a share, in the same period a year ago. Alcoa's income from continuing operations was $361 million, or 44 cents a share, 4 cents short of analyst estimates. Alcoa, however, beat on the top line, with revenue of $7.4 billion, better than the $7.2 billion analysts had expected.
The usual suspects were all present. For example, when accounting for the currency impact, Alcoa said profit came to 52 cents a share. In addition, industrial demand was lower while energy costs surged, causing margins to squeeze and profits to be halved. Still, the company pointed out that aluminum prices are at historic highs and demand in Asia is still strong.
Stock futures were higher Monday morning as reports of a cash injection into WaMu as well as a big pharma deal hit the news. Also, Monday marks the beginning of earnings season as the first of the Dow companies, Alcoa reports after the close. Investors will be interested to see how corporate profits have fared in the first quarter of 2008 while many economists say the U.S. may have entered a recession during that time.
On Friday, U.S. stocks closed mostly higher despite a dismal March jobs report that showed payroll have declined for the third month in a row while unemployment jumped. Still, while the Dow industrials finished 16 points or 0.13% lower, it registered a weekly gain of 3.2%. The S&P 500 rose 1 point, or 0.08%, Friday for a 4.2% weekly increase, and the Nasdaq Composite added 7 points, or 0.32%, Friday, rising 4.9% for the week.
Without much economic news today, investors will focus on corporate news:
If last week it was UBS and Lehman Brothers that announced equity deals and helped boost sentiment on Wall Street, this week it is Washington Mutual (NYSE: WM), which according to The Wall Street Journal, is close to a deal to get a $5 billion investment from private equity firm TPG and other investors. As of 6:58 a.m., WM shares are up over 15% in premarket trading.
The new earnings seasons kicks off tomorrow after the market closes when Alcoa Inc. (NYSE: AA) is scheduled to report first-quarter results.
Pittsburgh-based Alcoa has missed earnings estimates in only one quarter out of the past five. When the leading aluminum producer reported fourth-quarter results back in December, earnings of 36 cents per share beat the consensus of analysts surveyed by Thomson Financial by three cents, but were down from 74 cents per share in the same quarter of 2006. For this current quarter, analysts expect earnings of 50 cents per share.
Alcoa's full-year 2007 earnings per share of $2.60 missed estimates of $2.83, and were down from $2.96 for 2006. However, Alcoa also reported record revenue of $30.7 billion, as well as record income from continuing operations.
Alcoa's forecast earnings per share growth for the year is 9.85%, which is better than the industry average and the S&P 500. The consensus recommendation from analysts is to buy Alcoa, and has been for at least 90 days. The share price has been climbing from the 52-week low of $26.69 in January, and closed at $39.00 on Friday.
PDUFA date for Bristol-Myers Squibb Co. (NYSE: BMY)'s supplemental Biologics License Application for Orencia for the treatment of Juvenile Rheumatoid Arthritis.
Alcoa Inc. (NYSE: AA) to report Q1 earnings; conference call at 5pm.
Tuesday, April 8
Chattem Inc. (NASDAQ: CHTT) to report Q1 earnings; conference call at 9:00am.
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MOST NOTEWORTHY: Analog Semiconductors, OrthoVita and First Solar were today's noteworthy initiations:
Morgan Stanley initiated Analog Semiconductors with an In Line rating. The firm assumed National Semiconductor Corp (NYSE: NSM) with an Overweight rating and $26 target and is the firm's top pick; Analog Devices (NYSE: ADI) and Linear Tech (NASDAQ: LLTC) were initiated with Equal Weight ratings and a $32 target and $34 target, respectively.
Barrington believes OrthoVita (NASDAQ: VITA) is the market share and technological leader of the biomaterials market. The firm assumed shares with an Outperform rating and $4 target.
Canaccord Adams believes First Solar's (NASDAQ: FSLR) management and business model are among the best of any PV company and that execution has led to strong profitability plus a successful aggressive capacity ramp. Shares were started with a Buy rating and $325 target.
OTHER INITIATIONS:
Morgan Stanley initiated Yum! Brands (NYSE: YUM) and Domino's Pizza (NYSE: DPZ) with Equal Weight ratings and targets of $40 and $15, and also initiated McDonald's (NYSE: MCD) and Burger King (NYSE: BKC) with Overweight ratings and targets of $65 and $34.
Lehman initiated Alcoa (NYSE: AA) with an Overweight rating and $44 target.
Alcoa, Inc. (NYSE: AA) stock is falling after a FBR analyst downgraded the stock to "Market Perform" from "Outperform." The analyst added in a note to investors that he is concerned that fundamentals will slide in the second quarter if aluminum supply is able to meet demand. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AA.
After hitting a one-year high of $48.77 in July, the stock hit a one-year low of $26.69 in January. This morning, AA opened at $37.01. So far today the stock has hit a low of $36.39 and a high of $37.90. As of 12:50, AA is trading at $36.70, down $1.67 (-4.3%). The chart for AA looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in one and a half months as long as AA is below $45 at April expiration. Alcoa would have to rise by more than 23% before we would start to lose money. Learn more about this type of trade here.
AA hasn't been above $45 since July and has shown resistance around $40 recently. This trade could be risky if the US economy bottoms and picks up, but even if that happens, this position could be protected by resistance AA might find around $40, where the stock found resistance back in November.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AA.
Alcoa Inc. (NYSE-AA) is recently down 30 cents to $37.70. 
Goldman Sachs (NYSE: GS) sure is a downer. I was starting to feel a little better about the market when it decided to say some bad things about the upcoming earnings season. Thanks a lot, Goldman! According to this Bloomberg article, Goldman believes that earnings for companies will be, overall, very bad, and that the broad market will be brought down by them. Already, reports by General Electric (NYSE: GE) and Alcoa (NYSE: AA) have rocked Wall Street -- and not in a good way, let me tell you. Goldman's David Kostin is, in fact, disagreeing with other analysts who believe that the quarter won't be so terrible; he also thinks the S&P 500 will be lower by the end of the year by perhaps 6%.
Stock futures were lower this morning, indicating the beginning of what could be another down day on Wall Street as more troubling news from the financial industry was reported, while UPS warned of a slowdown in its delivery business.
Stock futures were higher Monday morning as reports of a cash injection into WaMu as well as a big pharma deal hit the news. Also, Monday marks the beginning of earnings season as the first of the Dow companies, Alcoa reports after the close. Investors will be interested to see how corporate profits have fared in the first quarter of 2008 while many economists say the U.S. may have entered a recession during that time.
The new earnings seasons kicks off tomorrow after the market closes when Alcoa Inc. (NYSE: AA) is scheduled to report first-quarter results. .gif){kind=logo}
Monday, April 7
Alcoa (NYSE:AA) is recently up 18c to $36.58. .gif){kind=logo}
MOST NOTEWORTHY: Analog Semiconductors, OrthoVita and First Solar were today's noteworthy initiations:
Alcoa (NYSE: AA) closed at closed at $34.68. 
Alcoa, Inc. (NYSE: AA) stock is falling after a FBR analyst downgraded the stock to "Market Perform" from "Outperform." The analyst added in a note to investors that he is concerned that fundamentals will slide in the second quarter if aluminum supply is able to meet demand. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AA.
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