Last week capped off another volatile session with wild moves in the major averages and expect a similar story this week. In addition to earnings, investors will continue to digest recent changes to the Troubled Asset Relief Program and the future of automakers. A measure of prices on the consumer and producer level will also give investors a look at inflation.
In the coming week, earnings reports will trickle out as investors have yet to hear from the two largest home-improvement chains, Lowe's Cos. (LOW) and Home Depot Inc. (HD), as well as PC giant Dell Inc. (DELL).
Lowe's releases its third-quarter results before the market on Monday and is expected to report a 35% decline in profit to $0.28 per share on revenue of $11.6 billion. The second-largest home improvement chain has a tendency to narrow or reverse its pre-market move in the regular session following an earnings release, doing so in three out of the past four quarters. Shorts may want to find a level of resistance in the pre-market if the stock makes a move to the upside. On August 18, Lowe's shares rose 3.6% in the pre-market after the company's second-quarter results beat the Street. However, shares ended the regular session down 0.2% as investors focused on the mixed guidance.
Dell reports results after the close on Thursday and the second-biggest maker of personal computers is expected to report a third-quarter profit of $0.33 per share, down from $0.34 a year ago, on sales of $16.5 billion. Shares of Dell touched their lowest level in more than ten years on Thursday as investors see signs that the PC industry is floundering in the weak economy. Investors wanting to trade into earnings on Dell should know that the stocks has outpaced its after-hours moves in next-day regular session trade in three out of the past four quarters. The trend has been negative with the stock moving lower in three out of the past four quarters. However, with the stock trading at a PE of 7, it may have little downside risk left. On August 28, Dell shares slid 9.7% in after-hours trading after earnings missed the Street. The stock widened its move in the following regular session, closing down 13.8%.
