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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

10/22/12

Stocks got off to a quiet start as mixed quarterly reports continued to pour in. Indecision was apparent in the early going as the major averages traded near their respective unchanged levels. As the day progressed, the S&P 500 and Dow headed lower. However, the final hour brought out bargain-hunters who lifted the major averages near their respective session highs. As a result, the S&P 500 ended unchanged. Meanwhile, the Nasdaq outperformed and settled higher by 0.4%.

Caterpillar (CAT 85.08, +1.22) advanced 1.5% after reporting mixed earnings. The industrial bellwether announced earnings of $2.54 against the Capital IQ consensus estimate of $2.24. However, the company's revenue of $16.45 billion missed the Capital IQ consensus by $470 million. In addition, the company lowered its full-year 2012 earnings and revenue guidance below consensus. Management commented on its cautious outlook by saying "CAT dealers have lowered order rates well below end-user demand to reduce their inventories."

The technology sector was the top performer after posting the largest loss during Friday's sell-off. Apple (AAPL 634.03, +24.19) gained 4.0% ahead of an event scheduled for 13:00 ET tomorrow. At the event, the company is expected to unveil a smaller version of the iPad tablet. The strong gains in Apple supported the Nasdaq throughout the day.

Cirrus Logic (CRUS 39.66, +1.44) rose by 3.8% after Feltl & Co. upgraded the stock to 'strong buy' on an expectation of an earnings beat.

Elsewhere in tech, Netflix (NFLX 67.88, +2.90) advanced 4.5% after reports indicated the company is considering moving into seven new markets, including Asia.

Also of note, OpenTable (OPEN 46.36, +2.77) gained 6.4% after reports indicated Yahoo! (YHOO 15.77, -0.07) may be interested in purchasing the restaurant reservation service. Note that Yahoo! is scheduled to report its third quarter earnings after today's close.

Philips Electronics (PHG 26.23, +1.63) surged 6.6% after the electronics manufacturer reported a 13.6% year-to-year rise in revenues. The revenue of EUR6.13 billion was ahead of the Capital IQ consensus estimate of EUR5.96. Today's buying has lifted the stock to levels not seen since June of last year.

Utility stocks underperformed the broader market. Avista (AVA 25.54, -0.92), which specializes in generating and delivering electricity, lost 3.5% after the company lowered its third quarter and full-year 2012 earnings guidance below consensus. In addition, the company issued in-line guidance for full-year 2013 as it sees earnings between $1.62 and $1.76. Peer Public Service Enterprise (PEG 32.43, -0.28) slipped 0.9% after Credit Suisse downgraded the stock to 'underperform' from 'neutral.'

Elsewhere in utilities, electricity provider The AES Corporation (AES 10.81, -0.23) slid 2.1%.

The Dow Jones Transportation Average trailed the remaining industrials, and closed lower by 0.4%. Overseas Shipholding Group (OSG 1.23, -2.02) sank 62.2% after announcing it is evaluating its strategic options, including a potential filing of Chapter 11 bankruptcy. The company also said that its past financial statements are not to be relied upon, and restatements may be needed. The uncertainty regarding the company's future prompted Dahlman Rose to downgrade the stock to 'sell' from 'hold' with a $0.50 price target.

Railroad stocks within the transportation average were mixed. Norfolk Southern (NSC 66.83, +1.19) advanced 1.8%, while CSX (CSX 21.29, +0.19) added 0.9%. Meanwhile, Kansas City Southern (KSU 78.36, -0.07) shed 0.1% after reporting mixed quarterly results. The company's earnings of $0.82 fell $0.03 short of the Capital IQ consensus estimates, while the revenue was reported in-line with Capital IQ analyst expectations. Following the earnings release, the stock received a pair of downgrades. BB&T downgraded the stock to 'hold' from 'buy' while BMO Capital lowered the rating on KSU to 'underperform' from 'market perform.'

Also of note, FedEx (FDX 91.48, -0.63) and United Parcel Service (UPS 71.56, -0.74) lost 0.7% and 1.2%, respectively. Note that United Parcel Service will report third quarter earnings before tomorrow's open. All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.