Tuesday’s market action will likely be dominated by IBM earnings reported Monday, and Goldman results coming Tuesday. What must you know?
AFTER HOURS ACTION: IBM
In extended trade shares of IBM pulled back after the company’s earning beat expectations but margins were slightly below forecasts.
Specifically, the technology bellwether reported a profit of $1.97 a share in the first quarter, up from $1.70 a share last year.
Sales at IBM rose to $22.9 billion, up from $21.7 billion last year.
IBM was expected to report a profit of $1.93 a share on sales of $22.75 billion, according to a consensus estimate compiled by Thomson Reuters.
IBM also said it now expects to earn "at least" $11.20 a share in 2010. Previously, its profit guidance was at least $11 or more.
"Margins were slightly below what we expected but they made up for it in other areas. Importantly, we saw continued momentum in software and consulting, that to me was important," said analyst Peter Misek Canaccord Adams. "So overall, a solid report. This wasn't a blockbuster or blowout report but it was solid."
What’s the trade?
Gross margins were a little disappointing, echoes Pete Najarian, but they did beat most everywhere else. Around 11 times earnings I think the valuation is very fair. I would look for opportunities on a pullback.
A lot was built into the quarter and I think there will be an opportunity to buy at levels lower than this, counsels Guy Adami.
I’m long IBM; I see it as a lower risk / lower reward kind of trade, says Karen Finerman. I really like it. But I’m in it for the long term.
I’d think about buying around $127, says Brian Kelly, but I also think there are better bangs for the bucks.
GOLDMAN'S DRAMATIC MID-DAY REVERSAL
Elsewhere in the market, the traders are closely watching action in the financials after shares of Goldman Sachs made a remarkable mid-day turnaround ahead of earnings Tuesday.
Chatter on the Street suggests late day strength stems from the SEC vote which split along party lines when deciding whether to charge Goldman Sachs with fraud.
What must you know?
I don’t think the public cares about the politics of it, says Karen Finerman. It’s very hard to know that the fallout will be, she says. It may be nothing but it could be quite serious. I’d continue to monitor how it plays out.
It’s not something that will go away, adds strategic investors Dennis Gartman. There’s never one cockroach. The implications for the financial instrument arena are likely wide ranging.
I agree that it’s not over, says Guy Adami.
However, it’s still a bull market and I wouldn’t be surprised to see the rest of the market move to new highs, adds Gartman.
BEYOND GOLDMAN: COMMODITY TRADE OFF
The commodity names took a big hit on Monday with oil and gold falling on the session. The move was largely triggered by a stronger dollar, as the Goldman ripple triggered a flight to quality.
What’s the trade?
In commodities, I’m bullish coal, says Pete Najarian. I’d keep an eye on Arch Coal.
TRADING THE GLOBE: BLACK CLOUD OVER EUROPE
As the market here in the U.S. tries to steady itself in the wake of the Goldman accusations, global markets are no safe haven.
The volcanic ash problem is slowing European commerce to a crawl.
Airlines have suffered losses described as being worse than after the 9/11 attacks after aviation officials closed parts of Europe's airspace on fears the ash could paralyze jet engines.
What’s the trade?
I’d play it with Ryan Air, says Brian Kelly. I think they’re impacted the most.
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Trader disclosure: On Apr 19, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Karabell Owns (GS), (C), (IBM), (FCX), (MON); Jon Najarian Owns (XLF) Put Spreads; Jon Najarian Owns (MS), Is Short (MS) Calls; Jon Najarian Owns (BAC), Is Short (BAC) Calls; Jon Najarian Owns (C), Is Short (C) Calls; Jon Najarian Owns (JPM), Is Short (JPM) Calls; Jon Najarian (CME), (CME) Puts; Jon Najarian Owns A Seat On CME; Jon Najarian Owns (MCO) Puts; Grasso Owns (DYN), (LPX), (ASTM), (ABK), (AAPL), (BAC), (BGP), (C), (CVGI), (COST), (JPM), (NEM), (PRST), (WMT), (PFE), (BA), (T); Seymour Owns (BAC), (AAPL), (BAC), (FXI), (MSFT), (MPEL); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Pete Najarian Owns (C) Calls; Najarian Owns (YHOO) Calls; Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (BAC), (BAC) Leaps; Finemran's Firm Owns (GLW); Finerman's Firm Owns (IBM); Finerman's Firm And Finerman Own (JPM); Finerman's Firm Owns (WFC) Preferred
For Tim Seymour
Seygem Asset Management Is Short (DB), (X), (VALE)
Karabell Owns (MON)
For Brian Kelly
Kanundrum Capital Owns (RAX)
Kanundrum Capital Owns (S)
Kanundrum Capital Owns (TLT)
Kanundrum Capital Owns (MORN)
Kanundrum Capital Owns (BX)
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Short (CME)
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Pound
Kanundrum Capital Is Short (XLV)
For Dennis Gartman
Funds Managed By Dennis Gartman Are Long Gold Futures
Funds Managed By Dennis Gartman Are Long Canadian Dollar And Australian Dollar
For Mike Khouw
Cantor Fitzgerald & Co. Is A Market Maker In (YHOO)
For Steve Grasso
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)
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