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Stocks Flat But Earnings News Abound

AFTER HOURS ACTION: GOOGLE

The headline: Google Crushes Estimates; Shares Up Over 10%

Jeff Macke admits that he missed a big move when he said earlier on CNBCthat he wouldn’t buy Google because it’s too risky. However, if he were long now he would take some off, and his overall thesis remains: stick with what works, such as Wal-Mart (WMT), because Google could give these tremendous gains up again in a flash.

Guy Adami called Google a proxy for the S&P 500, and thinks this move could bring the S&P back to the 1410 level. Any way you slice it, Google’s numbers are a bullish indicator for Friday’s trading day and maybe beyond.

The traders also brought up the question of whether the Google number was indicative of a broader tech industry move – that is, could Microsoft or Yahoo see similar gains when they report? Or is it exclusive to Google? Macke said it’s the latter. This huge earnings report is by no means a referendum on what’s going to happen in a stock like Yahoo.

If Google holds its after-hours gains, it will be more than double the stock’s best single day move.

WRITE-DOWN AND BACK UP AGAIN

The headline:Merrill Lynch Posts Steeper-Than-Expected Loss, But Shares Jump on Hopes Worst Is Over

Guy Adami believes that there is a light at the end of the tunnel for the financials, and the Merrill news could mean it’s getting closer. PNC Financial (PNC), Bank of New York Mellon (BK) and the financial ETF (XLF) all climbed Thursday on precisely that hope.

What’s amazing about this sector is that the companies can post numbers that are, by all accounts, bad, but because people expect the worst, the stocks actually rise on the news. That’s why it does not pay to be short any financials, Jeff Macke said. The stocks’ positive reactions to just about anything but terrible news is an “incredible bullish” sign, he said. And with that, the fear that more major banks could go belly up has eased.

I WANT A NEW DRUG

The headline:Pfizer Misses Profit, Sales Estimates on Increased Generic Competition

Sales of Lipitor, Pfizer’s blockbuster $17 billion cholesterol drug, are down an enormous 7%. That is what killed the stock and it is not good news for the company, Pete Najarain said. Pfizer needs to do something to get its pipeline going – the most obvious answer to Najarain would be to start making acquisitions.

SELL PHONES

The headline:Nokia Plummets 15% on Disappointing Profit, Bearish Handset Market Forecast

Basically, Nokia’s problem was that it does a lot of business in emerging markets where it sells its cheaper handsets and thus the margins are smaller. The company has not done a terrific job penetration the hugely profitable North American cell phone market, Pete Najarian said. That’s where the growth is.

How do you trade it without getting burned? Guy Adami would buy Corning (GLW), the company that makes the glass for many handsets as well as flat-panel televisions. He thinks it goes to $30.

CROPPED OUT

The headline: Potash , Mosaic , Agricultural Names Sell Off After Strong Rally

Don’t fear, Pete Najarian said. People are buying the May calls for Potash – it isn’t going anywhere. He would buy POT on pullbacks.

CHECK-OUT TIME?

The headline:Marriott Meets Profit Estimates, Lowers Full-Year Forecast; Strong Growth Overseas Helps Offset Domestic Softness

Hotels are pure economic plays but Marriott is actually more rooted in the business of managing hotels, not building them or worrying about filling them up, Jeff Macke said. If you want to see the true pain of this economic downturn shine through, look to the gaming stocks like MGM Mirage (MGM) and Las Vegas Sands (LVS). These are where the hotel business is getting slaughtered.

OIL RETREATS FROM RECORD

The headline: Crude Oil Slips 0.1% to $114.86 After Touching Record as Dollar Gains Against Euro

Oil services are the way to go, according to Guy Adami. He would own Halliburton (HAL) into earnings, along with Baker Hughes (BHI) and Schlumberger (SLB). That’s how to play energy, he said.

Crude is still worth buying on dips, Jeff Macke added.

And Pete Najarian pointed to natural gas and coal. Use pullbacks in those spaces as buying opportunities, he said.

ALL JETS ARE OFF

The headline: Soaring Fuel Costs Take Significant Toll on Southwest , Continental Earnings

Pete Najarian, who’s been the lone trader willing to recommend the airlines, said that if you’re going to buy any of them you need to think of it as a long-term investment. When consolidation solidifies, the synergies will become apparent, but these stocks will not budge so long as oil is at $115, he said.

STEEL NO LONGER A STEAL

The headline: Citigroup Downgrades U.S. Steel on Valuation, Sending Shares Lower; Nucor Jumps on Earnings

All this means is the easy money has been made in steel, Guy Adami said. It still goes higher. Own steel companies on dips.



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