I think the broad market will stay in calm for the remainder of this week. Let DC figure out what they need to do. The government, the economy, the debtors, and all other stakeholders can live with whatever it is. If the issues are solved this week, unexpected, the market will go back to a large time frame rally mode. My price tag? 1750 maybe. This is a perfect setup for ER play, as the market impact is minimum. We can isolate beta and focus on alpha.
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My first pick is credit cards. US consumers are buying again. They always love to buy things. Now some of them are out of job / out of office. What can they do to kill the time? Shopping.
COF – Capital One Financial - is currently scheduled to be announced after the close on Thursday, October 17, 2013.
Rumors:
Capital One Financial is a holding company whose subsidiaries provide a variety of products and services to consumers using its proprietary information-based strategy. The corporation's principal subsidiary, Capital One Bank offers credit card products. Capital One Services, Inc., another subsidiary of the corporation, provides various operating, administrative and other services to the corporation and its subsidiaries. The Consensus Estimate is for earnings of $1.75 this quarter and the whipser is for a profit of $1.84 per share.
If the number is in mid 1.8, the valuation should support an immediate price spike to 75+. The guidance will provide a better picture of the mid- to long- term target. My wild guess is 80 in 6 months.
Performance:
COF, along with much of the market, has had a very strong past couple of days and it would be natural for a short pullback. However, the fundamental trends continue to be in favor of COF in addition to the support for the entire sector by the Fed, and the move above $70 for the stock is a technical breakout that suggests any pullback that holds above $70 should be bought. That should be true here as we head into an expected earnings beat.
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Trading plan:
