Aetna Inc., Exxon Mobil Corp., MasterCard Inc., MetLife Inc., Pfizer Inc., Reynolds American Inc., Starbucks Corp., Sun Microsystems Inc. and Visa Inc.

 

These company's will release earnings reports this week, so select one or two for your play of the week.  I would watch STARBUCKS and VISA, which should be good economic indicators of what's going on outside of Wall Street that affects the market.

 

SBUX (starbucks) was down for the first part of the day on Monday, and speculation is that it will be a classic indicator of how American's are choosing to spend their discretionary income.  The coffee maker shuttered underperforming stores, and returned to core values of delivering an exceptional coffee experience, plus creating an environment conducive to long term "hanging out."  The 1Q reports will indicate if they succeeded.

 

You could make a play for Starbucks with a straddle order, that allows for both good news or bad.  I would combine the earning reports and play it out against headlines about SWINE FLU, which may keep people at home and out of public places.  Bears may think that's a reason that no matter what the report states, Starbucks is doomed to a slower 2Q and pre-summer sales season.

 

I would lean toward a "bearish" view of Starbucks because I think the Chicken Little’s of the stock world are still crying about the sky falling.  My take is so long as gas prices remain reasonable, and the economy shows "signs" of recovering, then Starbucks is a long term trade.  Avoid it in the short term, unless you're bargain hunting for something to sell next fall.  Keep an eye on headlines though, because the release and good marketing of iced drinks, along with a hotter than usual weather pattern could contribute to higher than expected earnings.

 

VISA is another stock I would keep a close watch on.  Lackluster consumer spending and the public's switch to a cash based payment policy may have a huge impact on the V.  This is one you should play very carefully, since a lot of talking heads are predicting a coming credit crisis that will make the housing collapse look like a deck of cards.  Personally, I think that the credit card companies are creating the crisis and so short this stock until it's worth pennies on the dollar, but that's just a personal opinion, and wouldn't be too good for the economy.  The credit crisis is created through malicious interest rates that border on usury, which is supposed to be regulated by the federal government.  Add to that fee's and penalties that can double and even triple an original balance, and the company has built a recipe for disaster.  Which is why they're predicting the crisis to come.  They KNOW it's out there, and just as people are choosing to walk away from their homes, they will walk away from their credit card debt.  The thing is, they're walking way from company created debt, which could have been managed by the credit card issuer, like V, and others.  Let them all burn, I would say, except in a consumer based economy, we need credit card issuers.  And they deserve to earn a profit for their efforts.  Who am I to define reasonable profit?  So let's make a great profit on the collapse of credit card companies, and call right now for reform to prevent it from happening.  Again, I think it's too late, because there is an entire industry built around credit card debt management, and collections, and wiping out balances on the book would create a lot of problems.  But if you "CREATE" additional debt through FEES and penalties, couldn't that creation be deleted?

 

These are questions that the industry is dealing with and should be addressed.  Set your RSS feeds to watch credit companies, and V this week.  I think consumer spending was still too low to have much of an impact on earnings, and that the number of people defaulting on debt, or falling behind is increasing, and so go short on V.  This stock will probably fall.

 

Those of you who read us, know I'm a bull based optimist, so tomorrow, I'll find you two winners to get on and take to the top.