IBM reports, all hell breaks loose: 3 more stocks to watch this week

Suzanne O'Halloran
0

IBM's (IBM) disappointing third-quarter results will make this Monday a rocky one for investors but let’s not kid ourselves; after the back and forth savagery we saw last week no one really thinks this sell-off is over just yet at least from the algos we have kickin around.

We’ve got exactly two full weeks of trading left in October. So far it’s been a bloodbath. From the opening day of the month through the lows last Wednesday the S&P 500 (^GSPC) has fallen 7.7%. Only a Bullard-led snapper on Thursday and Friday kept us from much worse. As it was the market rallied 3.6% from its lows and only ended 1.1% lower for the week.

The bad news is no one has much conviction that Thursday and Friday weren’t just traps. The sharpest rallies come in bear markets. The good news is after this week we won’t have to care quite as much about chart formations or economic speak. October 25th is even the end of Mercury Retrograde!

No more excuses. By this Friday we’ll know if the market is being driven by fundamentals of the economy, passionate animal spirits or just a brief correction. All we have to do is listen to these three stocks:

Apple

Tonight Apple (AAPL) reports its fourth-quarter.  The quarter is loud enough between new products and big events that the actual numbers don’t matter as much as the reaction.

What we need here are an optimistic forecast for the December quarter and a good reaction from Wall Street. Apple’s earnings per share are going to look great but on a net basis its earning barely as much as it made in 2012. We need Wall Street to ignore that and take the stock back to $100.

Amazon

In July Amazon (AMZN) said it would lose between $410 and $810 million this quarter. They weren’t kidding. The stock got annihilated. I love Amazon and I have nothing but respect for CEO Jeff Bezos but the company needs to try a little harder to appease shareholders.

Amazon shares are down almost 25% for the year and more than 15% since that disastrous quarter. Bezos needs something more here. This is is the ultimate faith stock. When it reports on Thursday management needs to give a reason to believe.

Dunkin’  

Last quarter Dunkin' Brands Group (DNKN) warned because no one wants to buy coffee or donuts when it’s cold and rainy. Somehow the stock is back above where it was at that point but investors will draw the line somewhere. This is a discretionary consumption economy. We need Dunkin’ to be hitting on all cylinders to know we’re in good shape.

Give me goods news out of those three and we’ll be over 2000 on the S&P 500 by Friday. If not this sell-off is just getting started. 

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