Before the Open (Feb 26)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mixed and with a lean to the upside. India and Hong Kong led the way; Indonesia, Malaysia, Japan and Singapore lagged. Europe currently leans to the downside. Greece is up 3.3%; Amsterdam, Prague, Russia and France are down the most. Futures here in the States point towards an up open for the cash market.

The dollar is up. Oil and copper are up. Gold and silver are up.
So as of now, the indexes are up nicely on the week but are sitting well off their highs. In fact the S&P is sitting near its previous resistance level. The bulls will claim dropping to retest a previous key level is normal and healthy for an uptrending market (if this is true, they should be buying right now, right). The bears will claim the inability to follow through in the near term is a little warning…that selling pressure so soon after hitting a new high isn’t a sign of strength. My take -> the trend is up, but because a handful of breadth indicators have hit extreme levels, odds favor a sideways move for 1-2 weeks, if not a mini correction. Overall I like the market and think new highs will be made again. But in the near term, a little frothiness needs to be worked off.
Stock headlines from barchart.com…
Target (TGT +0.66%) reported Q4 adjusted EPS of $1.30, well ahead of consensus of 79 cents.
Lowe’s (LOW +1.88%) reported Q4 EPS of 31 cents, right on expectations.
Chesapeake Energy (CHK -1.28%) reported Q4 EPS of 27 cents, well below consensus of 40 cents.
Dollar Tree (DLTR +0.67%) reported Q4 EPS of $1.02 weaker than consensus of $1.05.
Boeing (BA -2.17%) was awarded a $2.07 billion government contract modification for the procurement of 16 P-8A Multi-mission Maritime Aircraft full rate production Lot I aircraft and 16 Ancillary Mission Equipment kits for the U.S. Navy.
Weatherford (WFT -0.13%) reported Q4 adjusted EPS of 7 cents, right on consensus.
Alleghany (Y -0.25%) reported Q4 EPS of $6.99, better than consensus of $6.53.
Superior Energy (SPN +0.70%) reported Q4 adjusted EPS of 30 cents, below consensus of 31 cents.
Avago (AVGO -0.96%) reported Q1 EPS of 84 cents, stronger than consensus of 78 cents.
R.R. Donnelley (RRD -1.37%) reported Q4 EPS of 49 cents, higher than consensus of 38 cents.
AMC Entertainment (AMC +0.36%) reported Q4 EPS ex-items of 18 cents, right on expectations.
Chicago Bridge & Iron (CBI -0.97%) reported Q4 EPS o $1.80, well above consensus of $1.16.
First Solar (FSLR +0.48%) dropped over 10% in after-hours trading after it reported Q4 adjusted EPS of 89 cents, weaker than consensus of 99 cents, and then lowerd guidance on Q1 EPS to 50 cents-60 cents, well below consensus of 84 cents.
Edison International (EIX -0.50%) reported Q4 core EPS of 81 cents, better than consensus of 67 cents.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:00 MBA Mortgage Applications
10:00 New Home Sales
10:30 EIA Petroleum Inventories
1:00 PM Results of $35B, 5-Year Note Auction
Notable earnings before today’s open: AEGR, AES, AG, ANF, ARCC, AVA, BCRX, BKS, BUD, CHK, CLH, CNP, CRI, CVC, DGI, DIN, DLTR, JAKK, LITB, LOW, MDXG, NXST, PKD, RY, SNH,SODA, STWD, SUSP, SUSS, TASR, TDS, TGT, TJX, USM
Notable earnings after today’s close: ADSK, AGO, ANIK, ANW, ARI, AWK, AWR, BALT, BEAT, BIDU, BIOS, BLOX, BWC, CLR, CWT, DAR, DK, DPM, FARO, GEF, GMED, GPOR, GXP, HK, JCP, KW, MDAS, MITT, MWE, NDLS, NKTR, NOAH, NTRI, PLKI, QUAD, RIG, RNDY, SB, STAA, SZYM, TCAP, TEG, TIVO, UNXL, VNR, WDAY, WLL, WPRT, WR
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Feb 26)”

  1. Bulls front-ran support at at 1839.50 by about a point at 10 am Wed. That established a ST trgt at 1868.
    Today, could pull back to as low as 1845, and this ST tgt would remain valid. Below 1845, it’s invalidated.
    If we go to 1845, we’ll encounter resistance on the way back up at 1850 and be clear of it at 1852.
    Overall, LT tgt 1900.
    Futures overnight: +7 to +1.25, and now at +1.25.

    1. CORRECTION: I said incorrectly “Below 1845, it’s invalidated” referring to the target of 1868. The correct statement is “Below 1834, the target of 1868 is invalidated.”
      Sorry for the confusion.

  2. MBA index shows that home buying is shaky, down 8%. New home sales are equivocal given the weather recently, or is it fear of the economy? Housing matters greatly, but corrected for inflation, 1.1%, it means less than most believe.
    The ultimate dilemma is the defense budget. National defense cuts proposed make it appear that citizens must choose between social programs and keeping the country secure. Hobsons choice. Red ink future ?? Then the currency goes.
    Today the bulls want to try one more time to push past to former highs. 1845, but 1858 is possible. Then maybe more correction. My macroeconomic signals, Valueline VLMAP model, are showing that prospective earnings future (3-5 years out) risk-reward is weakening. Currently only 30% (R/R) over the next 3-5 years. Tactically, I am holding the broad indexes, with stops and put contracts. Even in a weak market there are winners. Mid cap and biotech seem to be leaders in Barrons.

  3. April 3 2000 is the last time the NASDAQ has hit these levels. I have a hard time believing the strength of this market. My indicators tell me more upside ahead.
    Warning I was bearish until 2/3/2014 when I got a buy signal.

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