Earnings Season Kickoff

Alcoa

on Tuesday after market closed. Its profit of 15 cents per share fell short of expectation of 22 cents per share, and its stock price fell from $10.30/share to $9.76/share after hours. While this does not sound very good, the decline was after the recent rally since last Tuesday, and Wed. morning will determine whether we will see further selloff or if the share will stabilize. This earnings season is critical to the health of the stock market. Unless Europe blows up, which it may do so finally, the recent rally had raised the hopes of investors that things might not be so bad. However, if earnings, and more importantly, forward guidance for various industries, especially US consumer related companies, start to contract significantly, this rally would likely go down as one of the sharp relief rallies in a bear market. The price action of companies with disappointment will also determine how the stock market might go forward. If earnings and forward guidance disappoint, but stock price does not go down a lot, a bottom for the year might be in already. That is, until really bad news come from Europe or China. In the coming days, earnings reports to watch would be J.P. Morgan

; IBM

, Wells Fargo

, AMR Holdings

and United Continental

; Bank of America

and Apple, Inc.

reporting

, with more to follow. Mark your calendar and don't miss them!