Big Gainers in Stocks Have Trouble

Stocks are advancing modestly as earnings are handily beating expectations, but some stocks that have had fabulous price runups-recently are down.

That's definitely the case with Caterpillar , they beat and raised their 2010 guidance, but stock is down: "...investors' expectations were high heading into the quarter, and 3Q results might not be enough to keep momentum in the stock," Bank of America/Merrill Lynch analyst Andrew Obin wrote to clients this morning.

That might be the case with many stocks. Freeport McMoran had great numbers ... flat today. UPSbeat and raised guidance ... down.

In a sense, we are already in a post-earnings environment: arguably, it is all about the election, the Fed, and, particularly, foreign exchange, as stocks get smacked around as the dollar moves up or down.

Elsewhere: strong earnings continue from airlines today. "Continued improvement in business travel, combined with capacity discipline from the airlines are creating a perfect storm of higher load factors (fuller planes) and rapidly increasing ticket prices," one analyst wrote to me. Growth appears to be continuing into the fourth quarter.

Two caveats:

1) comps are getting tougher. Business travel started to improve last year at this time.

2) Can they maintain capacity discipline? Airlines are starting to add back small amounts of capacity. So far, the plans are limited and most of that capacity will be added on international routes that are less competitive, analysts note. But if they start getting more aggressive with domestic capacity that could be a catalyst for an inflection point in trends.

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