TradingMarkets 10 Stocks You Need To Know For Tuesday

Stocks rose Monday, with strong performances by GM and Altria leading the blue chips. General Motors (GM | Quote | Chart | News | PowerRating) missed by 1.11 but the stocks rallied on the news that the company came to agreement with its unions to cut healthcare costs. The Supreme Court rejected a government appeal of a $280 billion case against the tobacco industry. Altria (MO | Quote | Chart | News | PowerRating) rose $4.30 to close at $74.96.   

Crude oil rose on news of a new hurricane, closing at $64.36, +1.73. 

Citigroup (C | Quote | Chart | News | PowerRating) reported 1.38, beating by 0.39.

Boeing (BA | Quote | Chart | News | PowerRating) an order for 20 787 jets from International Lease Finance.

Mattel (MAT) missed by 0.06.

Hasbro (HAS | Quote | Chart | News | PowerRating) missed by 0.04 and missed on revenues.

Chiron (CHIR | Quote | Chart | News | PowerRating) guided lower, saying it will deliver fewer doses of Fluviron this year than last year.

Now, here are a few stocks to watch on Tuesday:

IBM (IBM | Quote | Chart | News | PowerRating) reported $1.26, beating by 0.13. Net income was also strong, but revenues were light at $21.53 billion. The stock is trading in a flag pattern just under its 200-day moving average and traded higher after the close.

Rambus (RMBS | Quote | Chart | News | PowerRating) beat by 0.02, ex-items, with quarterly earnings rising almost 40%; revenues also beat estimates. This is also a flag, albeit smaller. A flag is basically a pullback and decreasing volatility.

Novellus (NVLS | Quote | Chart | News | PowerRating) was in-line; margins were slightly lower than expected. Net income fell 64%. NVLS is trading below its 50- and 200-day moving averages and is a pullback from lows here.

Before the open, look for Johnson & Johnson (JNJ | Quote | Chart | News | PowerRating) to report 0.86. Two-day pullback here.

United Technologies (UTX | Quote | Chart | News | PowerRating) is due to report 0.79 before the open. Both UTX and JNJ are Dow stocks.

Merrill Lynch (MER | Quote | Chart | News | PowerRating) is expected to report 1.18. A good report here should move the market higher.

Forest Labs (FRX | Quote | Chart | News | PowerRating) is expected to report 0.56 before the market opens. The April lows were in the mid-32s.

Motorola (MOT | Quote | Chart | News | PowerRating) is expected to report 0.28 after the close.

Wells Fargo (WFC | Quote | Chart | News | PowerRating) is due to report 1.15 before the market opens.

Yahoo (YHOO | Quote | Chart | News | PowerRating) is expected to report 0.14.

Now, let's answer the homework assignment:

Basically, the $VIX tends to revert to its mean, so when you see it spike dramatically--as it did recently--look for it to pull back, rallying the market. If you look at the two charts simultaneously yourself, you'll see what I mean:

The top chart is the S&P 500 and the bottom is the $VIX. For more information on how this works, read Larry Connors' book How Markets Really Work. You can find it here.

Now, let's get to the email box:

Someone told me I was basically picking stocks in the news and this was very unpredictable. Well, guilty as charged on the news charge (yes I know I am using the same word twice in one sentence). Basically, these are the stocks that are going to be moving, particularly when there is extremely good/bad news. Now the question becomes: well how do I trade them?  It really depends on what kind of trader you are: daytrader or swing trader. There's no way on Earth I can possibly explain all the innuendos of this today, but I will try and give some more specific trading ideas in future columns. Keep in mind, that just because I (or anyone else) think a stock may do something doesn't mean it will (see CPST, for instance).

Here is one idea: if a stock has made a nice run up into good earnings, what are the chances it's going to run up more? Often it's the "buy the rumor, sell the news" strategy that works the best.

Here's another: If you read some terrific news on a stock, chances are it's going to gap up that morning. If you enter your market order before the open, you just may get the top tick that day as the market sells off. If you're a daytrader, wait for intraday pullbacks.

Brice Wightman