After Hours Action: Alcoa

After the bell the Fast Money traders pored over results from Alcoa , in an attempt to game the stock and project trends going forward.

What must you know?

Shares popped as much as 3% in extended trade after the company said sales rose 18 percent despite a recent drop in aluminum prices, outpacing Wall Street expectations.

"It's constructive and it helps start the earnings season off on a positive note," says portfolio manager Brian Hicks of US Global Investors. "From the standpoint of Alcoa, they see the economy continuing to expand. It's robust enough that they have to increase their forecast for global aluminum production."

Looking at the numbers the aluminum giant reported earnings from continuing operations of 13 cents a share in the second quarter, reversing a loss last year of 26 cents a share on sales.

Sales for the most recent period grew to $5.2 billion, up from $4.244 billion last year.

Analysts who follow Alcoa expected the company to turn in a profit of 12 cents a share on revenue of $5.048 billion.

What’s the trade?

Instant Insights with the Fast Money traders

The move in the stock was all about future demand, muses Tim Seymour, they said what the Street wanted to hear. Currently, the stock looks a little challenged but I think it’s okay to nibble.

There’s an overhang of inventory in the aluminum space, so I’m not sure I could be a buyer of this stock, muses Joe Terranova. However it was a good start to earnings season. Because Alcoa is a Dow component the Dow should trade higher as a result on Tuesday.

After listening to the call I found the following interesting, says strategic investor Dennis Gartman:

- Profits were largely due to an increase in demand from airplane makers

- Alcoa reduced head count by 37,000.

- They said every area of their business was getting better.

- Alcoa reached an agreement with United Steel Works which I take to mean wage rates won't be off pressure.

If you're looking for a trade, the results could bode reasonably positive for airlines, says Gartman.

I wouldn’t be buying Alcoa as a global growth play, counters Brian Kelly. If they're commentary makes you bullish on the recovery I’d look at oil or something where supplies are under more of a constraint.

I don’t follow Alcoa closely, admits Karen Finerman. I don’t find their insights terribly useful – I’m much more interested in hearing from banks later in the week.

Monday: Alcoa
Tuesday: Intel, Yum!
Wednesday: Texas Instruments
Thursday: JPMorgan, Google
Friday: Bank of America, Citi, GE

> For complete coverage of Alcoa earnings click here

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AFTER HOURS ACTION: CSX

CSX shares rose in late trading Monday after the railroad firm reported results that beat Wall Street expectations.

Looking at the numbers, the railroad said it earned $1.07 a share in its second quarter, compared with 72 cents a share this time last year.

Sales for the most recent quarter reached almost $2.7 billion, up from $2.19 billion in the same period last year.

Analysts who follow the company projected CSX to earn 98 cents a share on revenue of $2.64 billion, according to a consensus from Thomson Reuters.

How should you game it?

Listen for forward guidance which should be revealed on the conference call Tuesday, counsels Brian Kelly. It's all about the forward guidance.

I’d also wait for the call and hope they say something great, adds Tim Seymour. The numbers above are okay but not great.

The trade for me is that if CSX and rival Norfolk Southerndecline on Tuesday I’d take it was a sign to pare back holdings, counsels Joe Terranova.

> For complete coverage of CSX earnings click here

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TOPPING THE TAPE: MICROSOFT

Big cap tech topped the tape Monday with Microsoft leading the sector higher following two analyst upgrades.

What’s the tech trade?

I see a ton of value in big caps such as Microsoft as well as Hewlett-Packard and IBM , says Karen Finerman. I just think the stocks are cheap and I’d be happy to own any of these names.


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TICK BY TICK: FINANCIALS TURN HIGHER

Bank stocks ended a volatile day with mixed results after Republican Sen. Scott Brown of Massachusetts said he will support the new financial regulatory bill, moving the bill closer to the 60 votes it needs to ultimately win final approval.

What’s the trade?

Clarity about finreg is always a good thing for the bank stocks, says Karen Finerman, but I think the better catalyst will come from improved credit quality and loan provisions. And we’ll hear about that in just a few days. At 1.1 tangible book value, Bank of America seems cheap to me.

The Street seems to be rotating into BofA as well as Citi , muses Joe Terranova. Goldman however pulled back in the middle of the day Monday and that’s discouraging. There should have been momentum in this stock and there wasn’t.

Deutsche Bank is a name I would not own, counsels Tim Seymour. CEO Josef Ackermann recently said financial industry profitability will likely decline in the face of tough new requirements on banks and a lack of coordination in how new rules are implements across Europe.

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BULL MARKET OR BS? DID LAST WEEK COUNT’?

Ahead of an action packed week on the economic and earnings front, investors are starting to question whether last week’s massive market gains were a sign of a bull market or just BS.

What should you make of it?

For insights we turned to Gary Shilling, of A. Gary Shilling & Company a self-describe realist. He tells the desk last week’s gains were nothing more than a short covering rally.

As you can imagine he remains bearish on global growth and the overall outlook for the recovery. Want to hear more? Check out our entire interview with Gary Shilling. Watch the video now!

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Trader disclosure: On July 12, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC), (BAC) Preferred; Finerman Owns (GOOG); Finerman's Firm And Finerman Own (HPQ); Finerman's Firm Owns (JPM), (JPM) Leap; Finerman Owns (JPM)l Finerman Owns (WFC) Preferred; Finerman's Firm And Finerman Own (BBY); Terranova owns (GOOG), (AMZN), (MON), (APC), (GMCR), (MYL), (MRVL), (BAC), (ADI), (ADBE), (AKAM), (HES), (CVS), (AXP), (EMC), (ABT); Kelly Is Short (GS); Kelly Owns (BP) Puts; Najarian Owns (INTC) Call Spreads

For Joe Terranova
Terranova works for (VRTS)
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners owns more than 1% of (CASS)
Virtus Investment Partners owns more than 1% of (LDR)
Virtus Investment Partners owns more than 1% of (LPHI)
Virtus Investment Partners owns more than 1% of (MGRC)
Virtus Investment Partners owns more than 1% of (XLB)
Virtus Investment Partners owns more than 1% of (XLP)
Virtus Investment Partners owns more than 1% of (XLY)
Virtus Investment Partners owns more than 1% of (XLI)
Virtus Investment Partners owns more than 1% of (XLK)
Virtus Investment Partners owns more than 1% of (XLU)
Virtus Investment Partners owns more than 1% of (SUBK)
Virtus Investment Partners owns more than 1% of (WDFC)
Virtus Investment Partners owns more than 1% of (YDNT)
Virtus Investment Partners owns more than 1% of (DRYS)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (GME)
Accounts Managed By Kanundrum Capital Are Long U.S. Dollar
Accounts Managed By Kanundrum Capital Own (SDS)
Accounts Managed By Kanundrum Capital Are Short (BCS)
Accounts Managed By Kanundrum Capital Are Short (EWA)
Accounts Managed By Kanundrum Capital Are Short (EWI)
Accounts Managed By Kanundrum Capital Are Short (FCX)
Accounts Managed By Kanundrum Capital Are Short (FXI)
Accounts Managed By Kanundrum Capital Are Short (KMX)
Accounts Managed By Kanundrum Capital Are Short (NATI)
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Accounts Managed By Kanundrum Capital Are Short (USO)
Accounts Managed By Kanundrum Capital Are Short (WYNN)
Accounts Managed By Kanundrum Capital Are Short (XLF)
Accounts Managed By Kanundrum Capital Are Short (XLI)
Accounts Managed By Kanundrum Capital Are Short (XLE)
Accounts Managed By Kanundrum Capital Are Short (RCL)
Accounts Managed By Kanundrum Capital Are Short (CME)
Accounts Managed By Kanundrum Capital Are Short (HIG)
Accounts Managed By Kanundrum Capital Are Short (MET)
Accounts Managed By Kanundrum Capital Are Short (RKH)
Accounts Managed By Kanundrum Capital Are Short (CAT)
Accounts Managed By Kanundrum Capital Are Short (JOYG)
Accounts Managed By Kanundrum Capital Are Short (XLB)

For Kevin Sterling
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BB&T Capital Markets Expects To Receive/Seek Investment Banking Compensation From (FDX), (UPS) In Next 3 Months
An Affiliate Of BB&T Capital Markets Received Non-Investment Banking Compensation From (UPS) In Past 12 Months

For Dennis Gartman
Funds Manged By Dennis Gartman Are Short Euro
Funds Manged By Dennis Gartman Are Short Yen
Funds Manged By Dennis Gartman Are Long Gold
Funds Manged By Dennis Gartman Short Crude Oil
Funds Manged By Dennis Gartman Are Long Natural Gas Futures, Natural Gas Trusts
Funds Manged By Dennis Gartman Own (AAPL)
Funds Manged By Dennis Gartman Are Short (GOOG)
Funds Manged By Dennis Gartman Are Short (GS)

For Gene Munster
Piper Jaffray Is A Market Maker In (AAPL)

For Mike Khouw
Cantor Fitzgerald Is A Market Maker In (AMD)
Cantor Fitzgerald Is A Market Maker In (INTC)

For Eric Jackson
Ironfire Capital Owns (MSFT)
Ironfire Capital Owns (GOOG)
Ironfire Capital Owns (AAPL)
Ironfire Capital Is Short (RIMM)

For Gary Shilling
Shilling Is Long U.S. Dollar Against Euro, Australian Dollar
Shilling Is Short Copper
Shilling Is Long 30-Year Treasuries

For Craig Berger
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (INTC)

For Carter Worth
Oppenheimer & Co. Is A Market Maker In (INTC)

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