'November Effect' Could Make for a Bumpy Ride

• By the tickerspy.com Staff
• On 3:50 pm EST, Monday November 2, 2009

We said last Friday that after last week's selling, this week's action could offer a better indicator of the market's direction through year end. We might be in for a "November effect" as mutual fund managers had to sell off their losing positions by October 31st in order to be able to book 2009 tax losses. If today's roller coaster ride is any indication, we may need to reach for the Pepto-Bismol as stocks surged, then tanked, then recovered. The positive takeaway is that the market showed resilience in the final hour of trading, bouncing off of its lows rather than continuing to sink. Today's action doesn't necessarily equal a trend as there is a lot of economic data coming out later this week and plenty of earnings reports for investors to chew on.

The Trucks and Auto Stocks Index was the top performing tickerspy Index on the day, led by BYD Co (Pink Sheets: BYDDF - News) with a 10% gain.

Stocks ended the day in the green with the Dow up 76 points to close at 9,789. The S&P moved up 7 points to 1,043, while the Nasdaq inched up 4 points to 2,049. Oil gained $1.13 to $78.13 a barrel, while gold jumped $13.60 to reach $1,054.00 an ounce.

On the economic front, the Institute for Supply Management (ISM) said its index of national factory activity climbed to 55.7 last month from 52.6 in September. Economists had expected a reading of 53. Elsewhere, the National Association of Realtors reported that its seasonally adjusted index of signed housing contracts rose 6.1% from August to 110.1, coming in ahead of the 103.8 estimate.

In earnings news, shares of Ford Motor (NYSE: F - News) surged 8.3% after the company posted a Q3 profit of nearly $1 billion and said it expects to be "solidly profitable" in 2011. For the third quarter, the automaker earned $997 million, or 29 cents per share. Adjusted EPS was 26 cents, easily beating analyst estimates of a loss of -12 cents. Revenue sank -$800 million from the same period last year to $30.9 billion, coming in above the consensus of $28.31 billion. 15 Pro investors counted the stock among their top-15 holdings at the start of Q3.

Shares of Clorox (NYSE: CLX - News) edged up 0.3% on news that the company's Q1 profit climbed 23%, in part due to increased sales of disinfecting products because of swine flu worries. For the period ended September 30th, net income was $157 million, or $1.11 a share, compared to $128 million, or 90 cents a share, last year. Wall Street was expecting EPS of 95 cents. Sales fell less than -1% to $1.37 billion. Looking forward, Clorox guided for EPS of between $4.05- $4.20 for FY10, up from the $4-$4.15 it had previously forecast. Analysts had expected FY10 EPS of $4.18.

Health insurer Humana (NYSE: HUM - News) posted a 65% jump in Q3 profit today; despite this, the stock moved -1.5% lower. For the quarter ended September 30th, the company posted a profit of $301.6 million, or $1.78 per share, up from $183 million, or $1.09 per share, a year ago. Revenue rose 8% to $7.72 billion. Wall Street had forecast EPS of $1.77 on $7.82 billion in revenue. For FY09, Humana expects EPS of $6.15 versus the analyst outlook of $6.14. For FY10, the company forecast EPS in the range of $5.05-$5.25 compared to the consensus of $5.37.

Shares of Loews (NYSE: L - News) rose 2.4% after the company's Q3 profit topped analyst expectations. For the third quarter, Loews' earned $468 million, or $1.08 per share, blowing by the 89-cent consensus. A year earlier the holding company controlled by the Tisch family lost -$137 million, or -31 cents per share. Revenue soared 26% to $3.74 billion. 28 Pro investors counted the stock among their top-15 holdings at the start of Q3.

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