The Week Ahead: The market plunge on Friday was a wake-up call to investors that high volatility remains a threat especially to the downside as was experienced coincidentally on the same day as the crash of 1987. Oil reaching $90 a barrel, disappointing earnings from 3M and Caterpillar, and the dollar reaching record lows against the euro are the primary worries. Watch existing home sales figures on Wednesday along with oil and gasoline inventories. Housing starts and durable goods are out Thursday and consumer sentiment Friday.

Stocks to Watch: Honeywell (HON) came in with solid 3rd quarter numbers but fell short of estimates as its stock fell to the 50 day moving average. Sandisk (SNDK) plummeted after beating estimates for earnings but offered a disappointing outlook. Cybersource (CYBS) beat earnings estimates and sees a good 4th quarter ahead as its stock made a 52 week high. Specialty Minerals producer Amcol Int'l (ACO) beat estimates and sales rose 27% as it hit new highs. Titanium Metals (TIE) appears to be completing a long chart consolidation and will replace Bausch and Lomb in the S&P 500 at a later date.

Special Note: The chances of a Fed interest rate cut increased as the yields on treasuries dropped markedly. Estimates for 4th quarter S&P earnings stand in an estimated range of 3-5% but is subject to change. Some interesting comparisons to valuations today compared to the peak market in 1987 include: a lower DJIA dividend yield at 2% today vs. 2.65% then, paying about $50 for $1 of dividend today vs. $39 then, and a whopping 4.04 average price to book value today vs. 1.73 then.


Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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