The Goodyear Tire & Rubber Company (NYSE: GT) sold off on Wednesday by nearly 20%. Volume was vastly above average. The third-quarter earnings release was the culprit. Although, at first glance, you might wonder what the heck is wrong.

Sales were down 15% in Q3 on a year-over-year basis, but they did improve 11% on a sequential basis. The company increased GAAP earnings per share by more than 100% to 30 cents. According to Bloomberg, income was 45 cents per share after items were excluded, five pennies ahead of expectations.

The Goodyear Tire & Rubber Company (NYSE: GT) is having a good day. Shares of Goodyear are up almost 8% in afternoon trading. Volume looks healthy, too. The company may have reported a loss for the second quarter, but since expectations were soundly beat, the market saw fit to bid shares higher (and I'm sure a fair amount of traders who short the stock were forced to cover).

According to Reuters, Goodyear said it lost, on an adjusted basis, 35 cents per share. That compares to expectations for a loss of double that amount.

AutoZone, Inc. (NYSE: AZO) implied volatility elevated into mid September earnings per share (EPS) and outlook: AutoZone is expected to report earnings per share on September 18. AZO management will be speaking at Goldman Sachs Group, Inc. (NYSE: GS) 14th Annual Retailing Conference on September 6. AZO September option implied volatility of 36 is above its 26-week average of 25, according to Track Data, suggesting larger price risks.

Cisco Systems, Inc. (NYSE: CSCO) implied volatility flat into September 5 analyst meeting: Cisco is recently up 40 cents to $31.83. CSCO will be holding an analyst meeting in San Jose, CA, on September 5. BAMO says, "we believe the meeting will be used to showcase CSCO's growing technology platform and emphasize the company's mantra of the network as the IT platform." CSCO September option implied volatility of 26 is near its 26-week average of 28, according to Track Data, suggesting non-directional risk.

Daily options update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

First it was pet food then it was toothpaste and toys with lead paint. Now federal officials have told a small New Jersey distributor to recall 450,000 tires after the company disclosed that its Chinese supplier had stopped including a safety feature that prevented the tires from separating. The recall could present a major challenge as the company waited two years to inform the feds of the problem, and in all probability many of the tires will never be tracked down.

China is facing an enormous amount of bad publicity in the wake of the recent spree of manufacturing problems, and the media (myself included) is automatically linking this recall with the aforementioned the recalls of toothpaste and pet food:

The defective tires join a growing list of problematic products with origins in China. A huge recall of potentially tainted pet food in March was followed by widespread reports of toothpaste manufactured with a toxic chemical and toys coated with lead paint. -New York Times

There has been mounting pressure on the Chinese government to shore up manufacturing standards, and it doesn't seem likely to abate any time soon. The only question is whether consumers will step in and make their voices heard. My hunch is that China-made products are so pervasive that no amount of recalls and manufacturing snafus will lead to a boycott of any magnitude.

Today Exxon Mobil Corp. (NYSE: XOM) announced plans to build a factory to start the manufacture of a new compound that has the potential for making longer lasting, more fuel efficient tires.

With the ever increasing demand for fuel, the possibility of being able to pick up a tire that will significantly reduce fuel consumption is definitely a pleasant thought. According to Exxon, it will be commercializing technology later this year for an elastomer compound that will create more durable tires while at the same time lighter than today's tires, and lighter tires equals better fuel mileage.

The initial plant to develop the new compound will be located in Pensacola, Fla., and will be capable of supplying customers globally. As of right now the company expects that they will have the first plant up and running by early 2008.

Shares of XOM fell 0.6% today down to $85.84 down $0.52, giving back some of yesterday's strong gains.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer. DISCLOSURE: Mr. Fowlkes owns and/or controls diversified portfolios of long and short stock and option positions that include holdings in XOM.

No, not that spare tire. This isn't going to be a just another blog post about diet and fitness -- you're not that lucky. This is about actual nasty, filthy old junk tires and what we're doing about them. Of course, I'll intersperse some investment ideas for your consideration, but basically I'm just talking trash. A few of our readers would say that for me, that's just par for the course.

An article at Phillyburbs.com revealed that last year, of the approximately 300 million tires discarded, 261 million were recycled in some manner. Most of the remaining slugs were properly processed for landfill or are sitting in piles over at my neighbor's place waiting for the Wisconsin Department of Natural Resources to say something about it (again). Suffice it to say that in the area of tire recycling, for the most part, we have taken up the challenge and we are doing something about it.

Based on a pending labor agreement with members of the United Steelworkers Union, The Goodyear Tire & Rubber Co. (NYSE: GT) shares have posted a new 52- week high, rising 40 cents to close at $20.12 on Tuesday, Dec. 26. At market close today, shares were still up.