Stocks Rally on Earnings

AFTER HOURS ACTION: IBM

The headline:IBM Shares Soar After It Crushes Earnings, Sales Estimates, Guides Higher

IBM’s move was lockstep with Intel as it beat numbers across the board. But Big Blue’s big number is not indicative of a broader tech-related turnaround or an earnings mandate from the overall stock market. It is purely an IBM story, Tim Seymour said. The company owes its outstanding quarter to its huge international growth.

Guy Adami thinks it could bode well for Microsoft’s earnings later this month, mainly because MSFT has overseas businesses that mirror IBM’s. However, he agreed that this is not a tell for the tech sector at large.

How do you know it isn’t? There’s still plenty of duds, Carter Worth said. Dell (DELL) is a “bust,” Hewlett-Packard (HPQ) is in trouble and that’s not even going near some of the miserable semiconductor names. Worth added that he thinks IBM will break out here and it should be owned, a point that was echoed by Seymour, although Peter Najarian said he’s taking profits.

STOCKS RALLY ON EARNINGS

The headline: Stocks Surge as Investors Cheer Earnings From Intel (INTC), JPMorgan (JPM) and Consumer Names

Perpetual bear Carter Worth said, even after Wednesday’s triple-digit move, that he wouldn’t put much faith in trying to keep the rally alive. The market still has “no character at all,” he said. “We’re going nowhere.”

Guy Adami, on the other hand, expressed a sense of bullishness. He’s been saying he believes the Bear Stearns (BSC) imbroglio represented a bottom, and he reiterated that on Wednesday.

BANK ON IT

The headline: JPMorgan , Wells Fargo Surge on Better-Than-Expected Earnings; JPM CEO Jamie Dimon Says Credit Crisis “Well More Than Halfway Through”

JPMorgan and Wells Fargo certainly are some of the best houses in an otherwise terrible neighborhood, Tim Seymour said, but there’s no point in getting overly excited about their earnings.

Pete Najarian has been keeping with a simple financials trade: Buy the financials ETF at $24 and sell it at $27, which are the parameters it has been trading between for several weeks. If it breaks out, then it will be time to put new limits in.

TAKE YOUR POSITION: CITIGROUP

The headline:Citigroup (C) to Report Earnings Friday Before the Bell; Analysts Expecting Los of $0.95 Per Share

Is it possible that Citi, after writing down so much, is finally a compelling investment? Guy Adami gave the notion some thought. He said there’s no way to know what the earnings story will be, and he certainly wouldn’t race in the stock, but it is finally at levels where it looks interesting.

Long term, Citi is a great investment, Pete Najarian said. But short term? Not so much.

FIZZY EARNINGS, FLAT SHARES

The headline: Coca-Cola Shares Flat Despite Better-Than-Expected Profit

Coke’s consistent international story is reason for the stock to continue to outperform, according to Tim Seymour.

It’s also benefiting from the weak dollar as it moves into more developing nations, Carter Worth said. He’s long Coke and short Pepsi , which has far less international exposure.

WORKING ON THE RAILROAD

The headline: Rail Shares, Transports Rally on Better-Than-Expected CSX Earnings

Rails, and the materials they carry – think agriculture, steel, coal – continue to work as trades, and it looks to Guy Adami that analysts are finally starting to wake up to this after Goldman Sachs noted that U.S. Steel (X) was cheap.

Steel names are indeed good places to be, Carter Worth said. Tim Seymour added that it is because they have seemingly unlimited pricing power. He predicted Nucor (NUE) blows out its earnings on Wednesday.

CRUDE CROSSES $115

The headline: Oil Closes Up 1% to Record $114.93 After Climbing as High as $115.07

Dennis Gartman called into Wednesday’s show to give his thoughts on the oil trade, urging every investor to put on an energy position of some sort if they haven’t already.

Oil continues higher thanks to strong demand after breaking out last week at $111, Gartman said. Particularly, he pointed to oil exploration companies like Brazil-based Petrobras , which is putting money to work drilling and finding new oil supplies. That’s something that the U.S. integrated oils are not doing, and it’s going to end up being a problem for them, Gartman said. In addition, Petrobras is the “best” company in the world at producing ethanol from sugar, he added. Put it together and PBR is one “compelling story.”

Gartman Owns (SJT), (NFLX), (AAPL), (JPM), (RIMM), (PCU), (GLD), (SWC), (ICE), (CQB), (GE), (AGU), (FSLR), (SDS)
Gartman Is Short (WFMI), (GM), (PSP), (DRYS), (SWY)
Gartman Is Short (NFLX) Calls, (PCU) Calls, (RIMM) Calls
CIBC Gartman Index Owns Copper, Aluminum, Gold, Sugar, Corn, Soybeans, the EUR, Natural Gas
CIBC Gartman Index Owns Natural Gas Futures
CIBC Gartman Index Is Short Crude Oil