Alcoa Reports Disappointing Earnings

Last Tuesday marked the unofficial launch of earnings season when Alcoa
(AA) announced their results for the third quarter to the world.  To
say the least, the market was disappointed.  The Aluminum processing
giant missed earnings by $0.01 sending the stock into a freefall, and
taking the general market with it.  Management noted that higher energy
prices were impacting their results.  Few people realize that Alcoa is the
world’s largest consumer of electricity.  Their giant smelting
operations use unbelievable levels of electricity.

The stock, which traded as high as $40 a share prior to the news
announcement, today, 5 trading days later, ended at just over $38, a
difference of about 5%.  Not a substantial movement when you consider that the prices is more than $10 off of its recent high of $48.77 set back in July.  Alcoa lost almost 20% of its value in July and August, and this
negative report, on the larger scale had a substantially muted impact.

While Alcoa’s reaction to negative news was somewhat muted, the
technology industry will no doubt get some hearts racing this week.  The
Technology industry, as measured by the iShares Dow Jones US Technology ETF (IYW) is up more than 18% since the beginning of the year, as compared to the S&P 500 which is struggling to be up 10%. No doubt investors, with the strong market movement over the last few months, will be looking for estimate beating results from many of the companies reporting this week.

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Some of the biggest technology names, including Intel, Ebay, and Google
have all produced gains of over 25% since the beginning of the year,
and all report earnings this week.

The market is expecting big things from these technology players, and
now is the time to deliver.

Technology companies will be heavy on the earnings announcements this
week.  Tomorrow, Intel (INTC) will report.  Wednesday earnings
announcements include: ASML Holding NV (ASMLD), eBay (EBAY), and
Polycom (PLCM).

Thursdays group includes: Fairchild Semi (FCS), Xilinx Inc. (XLNX),
SanDisk Corp. (SNDK), Cree Inc. (CREE), Cypress Semi (CY), Google (GOOG), PMC-Sierra (PMCS), and SAP AG (SAP).  The week is rounded
out Friday with Honeywell (HON), and Xerox (XRX) reporting.

I would expect to see quite a bit of volatility in the markets this
week, especially in the technology names.  For those experienced
investors, putting straddle options trades on some of the more volatile names
might be a great way to profit from their anticipated movement.

•  Home Improvement Retail Stores (Down over 18%)

Continuing the fallout from the subprime market, and the subsequent
backlash in the real estate market, the Home Improvement Retail Stores are down over 18%.  The industry downdraft is supported by major moves from the industry giants, Home Depot (HD) and Lowe’s (LOW) which are both off more than 6%.

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