Silence Is Golden

 | Oct 08, 2012 | 11:15 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:




Can you get ahead of a further slowdown before you get good news? That is what's happening in the iron-ore trade today. Some people are interpreting the China data as positive, even as media pundits readily pan it. Others are saying that the Chinese are doing so badly that they will have to turn on the jets.

I am of two minds for the moment. I am watching, for example, Cliffs Natural Resources (CLF) and Vale (VALE), two iron ore producers that are catching bids left and right because of the China trade. That's terrific because the charitable trust owns Vale.

There is only one problem: If Vale were to report tomorrow, I would expect its earnings to be slashed and the stock to get hammered.

It all comes down to whether the stimulus comes before the companies announce their quarters or after. As long as companies have nothing to say and can't say anything, they can be buoyed by things like the iron ore move and buy the Chinese industrial cyclicals.

Until they speak.

Because once they speak, we are hit upside the head by the negative two-by-four that is earnings. That's one of the reasons Alcoa (AA) is so important. It has the misfortune to have to speak in an environment where I would have expected it to rally into positive China chatter.

The moral of the story? If a Chinese-related play says nothing, based on the Vale/Cliffs maneuver, I expect its stock to trade up.

If it speaks?

Get ready to sell.

Columnist Conversations

Now that AAPL has violated the shorter term support, these are the two areas I have to consider for new buy en...
The symmetry is holding up in MCD.  Target 1 is 163.34 if we continue to hold above here!  ...
As far as TSLA is concerned, I still have a higher target above the market at the 409 area.  I stated in ...
The TLT setup discussed in my last commentary is a bust. Key support was violated and it violated the recent l...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.