(By Rich Bieglmeier) Monday's trading action was positive for stocks. Just when it looked like bulls would get run over by sellers, the trading programs kicked in and stocks closed green for the day. Like a good distance runner, bulls saved their kick for the end of the day. The late-afternoon hustle kept the Dow and S&P in contact with their 50-day moving averages and the sell signal party can be put on hold for another day.
That's the good news for today. The bad news is that Goldman Sachs reports 80% of the S&P 500 companies that reported earnings also issued lower guidance for the fourth quarter. Studies show that earnings revisions are a reliable, future indicator for stock prices. If the reduced outlooks continue at the current pace, it will be super-duper hard for stocks to advance much higher.
Staying on the earnings theme, the handful of iEstimate companies that reported earnings on Monday all beat Wall Street's consensus estimate and managed to gain ground on the day. We have our fingers crossed that the remaining companies fall in line, too.
As for the big names that didn't meet the iStock iEstimate criteria, Caterpillar Inc. (CAT) slashed its outlook for the third time in a matter of weeks. Yahoo! Inc. (YHOO) did better than expected, and shares were up nearly 5% in after-hours trading. Texas Instruments Inc. (TXN) joined CAT and the overall trend by lowering their outlook for the fourth-quarter, which brings us to our weekly sector review.
Semiconductor earnings have been rotten, fourth quarter estimates lowered to the point where they look up to gum stock on your shoe. However, the sector chart shows the group might be in the process of bottoming out. We'll talk about it more, later today, with our weekly sector performance review.
Coal stocks are another interesting entry into our industry view. If there is any one sector that appears to be tied closely to Mitt Romney's chances to win the White House, it is coal. Since the first debate, coal stocks have been burning it up. While focus groups and spin misters will tell you who they think won last night's debates, all you have to do is watch stocks like James River Coal Co. (JRCC) and Alpha Natural Resources, Inc. (ANR) to see who Wall Street thinks came out ahead.