8:00pm (EST)

It was a tough Friday for the bulls as the market suffered its worst decline for 2010 despite some solid earnings reports.  

The Dow fell 100 points for the day, erasing all of its gains for the week to close at 10,609.  The index reached a high of 10,767 and came thisclose to hitting our target of 10,800 which we set in August 2009.  For the week, the Dow lost 9 points…

The Nasdaq fell 1.2%, or 29 points, to close at 2,288.  The index had already blown past our target of 2,275, and for the week, the Tech-heavy index fell 30 points after touching a high of 2,326.

The S&P 500 fell 12 points, or 1.1%, and settled at 1,136.  We had set a target of 1,175 in August and the index reached a high of 1,150 this past week. 

Folks, we mention all of this for a reason (not to toot the horn) because it defines some of our trading strategies.  We have done well for our subscribers with the bull market rally that started in March 2009 and at some point the market will correct.  It may be 5%, 10%, or even 20% but no one knows when that will be.  When that happens there will be a time to buy put options and we saw some things on Friday that has made us cautious but it will take more than a 100 point drop to get any real “fear” in the bulls.    

We knew coming into the week there was the possibility of the market heading higher and we where there heading into Friday.  The two companies that we were counting on to take us past our target levels were Intel (INTC, $20.80, down $0.68) and JPMorgan Chase (JPM, $43.68, down $1.01). 

Both companies reported incredible earnings…Intel posted its highest gross profit margins ever, at 65% and JPMorgan earned a $3.3 billion profit in its latest quarter.  The fact that these two market heavyweights blew past Wall Street’s numbers and we could not get a nice rally was very discouraging for the most part.

We still think there’s a chance of a decent pop over the next few weeks as the heart of earnings season will get underway starting on Tuesday but a lot will depend on this week’s action. 

Here is a look at the earnings calendar (quotes are from Friday’s close):

Tuesday:  (Before the bell)  Citigroup (C, $3.42, down $0.09), Fastenal (FAST, $45.86, down $0.44), Parker Hannifin (PH, $58.56, down $0.23), Precision Castparts (PCP, $113.75, down $1.59), TD Ameritrade Holding (AMTD, $18.32, up $0.10). 

(After the bell)  Cree (CREE, $54.01, down $3.84), CSX (CSX, $50.04, down $0.51), International Business Machines (IBM, $131.78, down $0.53), NuVasive (NUVA, $30.68, down $0.28), Tessco Technologies (TESS, $17.51, up $0.25).   

Wednesday:  (Before the bell)  Bank of America (BAC, $16.26, down $0.56), Brinker International (EAT, $15.18, down $0.27), Coach (COH, $36.79, down $0.71), Jefferies Group (JEF, $25.48, down $0.34), M&T Bank (MTB, $73.16, down $2.18), Manpower (MAN, $57.06, down $1.88), U.S. Bancorp (USB, $24.62, down $0.71), Wells Fargo (WFC, $28.08, down $0.91). 

(After the bell)  Dr Reddy’s Laboratories (RDY, $26.98, down $0.14), eBay (EBAY, $22.47, down $0.41), F5 Networks (FFIV, $51.39, down $0.75), Kinder Morgan Energy Partners (KMP, $63.45, down $0.38), Seagate Technology (STX, $17.77, down $0.57), Starbucks (SBUX, $23.27, down $0.28). 

Thursday:  (Before the bell)  Charles Schwab (SCHW, $19.00, down $0.18), Fairchild Semiconductor (FCS, $8.77, down $0.45), Freeport McMoRan Copper & Gold (FCX, $84.30, down $0.78), Goldman Sachs (GS, $165.21, down $3.32), Morgan Stanley (MS, $30.38, down $0.82), PNC Financial Services Group (PNC, $56.68, down $1.16), Southwest Airlines (LUV, $11.28, down $0.18), United HealthGroup (UNH, $33.75, up $0.43), Xerox (XRX, $8.84, down $0.05).

(After the bell)  Capital One Financial (COF, $41.13, down $0.54), Deckers Outdoor (DECK, $108.72, down $0.37), Google (GOOG, $580.00, down $9.85), Intuitive Surgical (ISRG, $308.58, up $0.58).

Friday:  BB&T (BBT, $27.76, down $0.76), Exelon (EXC, $48.60, down $48.60, down $0.48), General Electric (GE, $16.44, down $0.26), Harley-Davidson (HOG, $25.08, down $0.65), Johnson Controls (JCI, $29.31, down $0.53), Kimerbly-Clark (KMB, $62.22, down $0.80), McDonalds (MCD, $62.28, down $0.37), Schlumberger (SLB, $70.83, down $0.46).

As you can see, some of the bigger names will be eBay, IBM, General Electric, Goldman, Google and the Financial stocks.  It is hard to say how the financials will trade over the near-term as Obama is trying to get as much as $120 billion from them as a fee or tax.  

Economic news:  Building Permits, PPI, and Housing Starts on Wednesday and Crude Inventories; Thursday Wall Street gets numbers on Initial Claims, Leading Indicators, and the Philly Fed.

We will be back in the morning with the trade updates and a fresh outlook.  We have updated the 2010 portfolio in the Members Area and hope to have a short video that will be ready on Tuesday as well.

As we head to press, Dow futures are up 32, Nasdaq futures are higher by 10 while the S&P 500 futures are getting a 4 point bump.

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