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Tickers in this Article: BRO, JNY, NVS
There are many events that can cause the price of a stock to fall. Some can be earnings related while, other can be caused by upgrades, downgrades, or just plain fear and greed. To predict if a stock is going higher or lower we must look at the news, the big picture and, finally, the stock's reaction to this news.

The three stocks I want to examine today are Brown & Brown (NYSE:BRO), Jones Apparel (NYSE:JNY) and Novartis AG (NYSE:NVS).

Brown & Brown Matches
After market close on October 20, 2008, Brown & Brown reported earnings of $40.6 million, down 12% from $46.2 million in the same quarter one year ago. This matched estimates of 29 cents per share according to analysts polled by First Call and Thomson Financial. During the conference call the management said, "We are pleased with our third-quarter results as our industry continues to stare into the abyss of falling rates for property and casualty coverage's. The joker in the deck on a forward-looking basis is the economy. Notwithstanding the course of recent events, we remain optimistic about the future." The next day (October 21) shares closed down 85 cents at $19.15. The shares closed the week at $17.93.

Jones Apparel
Jones Apparel last week commented on the weak retail operations which resulted in a downward revision of it guidance for the full year's earnings. Moody's Investors Service stated "As a result of this update, earnings for the second half of 2008 are now expected to be significantly weaker than Moody's previous expectations." Moody's downgraded the retail chain' default rating to Ba2 from Ba1. This shows Jones Apparel is facing mounting pressure not only from the ratings agency but also from the weak economy. On October 27, it announced the completion of its flagship Nine West store in New York. The stock saw a 5.5% rally from Friday's close of $8.35 to around $8.81 nearing Monday's close. (Read about what these ratings mean for a company and it's shareholders in What Is A Corporate Credit Rating?)

Novartis Looks to the Future
Novartis missed estimates last week when it reported earnings per share coming at 92 cents or $2.08 billion versus the estimate of 95 cents and confirmed guidance for 2008. The company will also cut 550 jobs at the U.S. Sales division in an effort to to cut costs by $80 million annually starting in 2010. On October 27, it announced positive results for an arthritis drug called ACZ88. The benefit described by Novartis was a "rapid long lasting remission" which would be favorable for patients. Shares were trading up about 1% on Monday around $47.70 near the closing bell. (To find a healthy pharmaceutical investment in a market full of weak drugs, read Measuring The Medicine Makers.)

Bottom Line

News events give us a glimpse into a company's overall health and how the stock can trade both long and short term. To stay ahead of everyone else requires you to watch the news carefully and how shares trade on that news during the day.

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