The Financials & Metals Review For the Week of October 24, 2011

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The Financials Review
For the week of October 24, 2011

By Frank LaMantia

Some experts think the U.S. may see another downgrade in its rating. This could bring the bears running to sell in the near future. The market has had a nice rally over the past few weeks even though the risk of Europe's default has risen. It is funny that there was a summit this weekend and yet there is no talk of the results but that leaders are half-way there. The plan was to have bond holders take losses and China is supportive that Europe will find a way to solve the problem. If they are supportive, maybe China could buy a chunk of it.

Eyes may be on Netflix's third quarter earnings because of the price increase and attempt to split up the companies video subscription service. The company could have lost over 600,000 U.S. subscribers from June through September. This could be half of their subscribers. Over $9 billion in shared wealth is estimated to have been lost due to the stock dropping over 60%. (1) Cigna is set to acquire HealthSpring for $3.8 billion and will pay a 37% premium from the stocks close of $40.16 on Friday. Cigna is getting bridge financing from Morgan Stanley. The purchase is to build up its Cignas Medicare Advantage business.(2) Caterpillar reported its third quarter earnings and showed an increase of over 40% from last year. Revenue rose to 41% from 15.7 billion and this even included the companies buy of Bucyrus International, a mining company. Some are saying that the earnings from CAT show that a recession might be unlikely. (3)

1) Ahead of the Bell: Netflix to detail 3Q damage - Yahoo! Finance
2) News Headlines
3) Caterpillar's Earnings Show No Recession Is on the Way - TheStreet

***chart courtesy
Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.


The Metals Review
For the week of October 24, 2011

By Daniel Cronin

A very odd week for the metals. They looked to have all the makings to rally with a shaky equity market and a rallying Euro but instead Gold decided to go in a free fall from $1,670 to $1,600. I loved Gold down at $1,600. I believe it should be bought around those levels, but it was very strange to see Thursday's action with gold falling more than $40 mid week but recouping the losses to trade at $1,650. I still like this market and would look to buy some OTM calls this week, aiming for the $1,700 and above calls.

Copper came down hard to test the lows of $3.00 and held there again before rallying back up some 30 cents to $3.45. Look for copper to continue consolidating and gaining ground as the equities look to be stronger after they broke the 1225 level in S&P.

***chart courtesy
Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.

Disclaimer: Past performance is not indicative of future results. Trading futures and options involves substantial risk of loss and is not suitable for all investors. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. The use of stop loss or contingent orders may not protect profits and may not limit losses to the amount intended. Certain market conditions make it difficult or impossible to execute such orders.