Before the Open (Sep 23)

Good morning. Happy Tuesday.
The Asian/Pacific markets closed mixed. India dropped 1.6%, followed by Indonesia (down 0.6%) and Korea, Taiwan and Hong Kong (down 0.5%). China and Australia each moved up about 0.9%. Europe is currently suffering big across-the-board losses. Austria is down 2.6%, followed by France (down 1.9%), Greece (down 1.6%), London and Italy (down 1.5%), Spain (down 1.4%), Germany (down 1.3%), Prague (down 1.2%) and Norway (down 1%). Russia is up 0.4%.

The dollar is down. Oil and copper are up. Gold and silver are up.
The market got hit hard yesterday – one of its biggest down days since bottoming in early August. Here are the daily index charts. The Dow and S&P 500 remain in good shape – at least from a longer term swing trading standpoint. The Nas has neutralized and is now trading in a rectangle pattern that has bullish implications because it’s forming within an uptrend, but there’s no telling when will resolve. The small caps and mid caps look terrible. A slow drift down has indeed hit an air-pocket, and in both cases, I don’t think anyone could argue support is close.

I could certainly argue a relief bounce will play out soon, but I don’t think it will mark a bottom. More selling is needed to washout the longs. Instead of trying to reverse now, ideally the AD line would plunge, new lows would surge, the bullish percent charts would fall hard, etc. If you’re bullish, you root for more weakness because it’d be easier to rally off a legit correction than from the current level. Plus a bigger move down gives you an opportunity to buy at lower prices.
Don’t fight a correction. Since April 2013 there have been 6 pullbacks that lasted a couple weeks and covered 75-100 points.

Stock headlines from barchart.com…
CarMax (KMX -1.42%) reported Q2 EPS of 70 cents, better than consensus of 67 cents.
Dresser-Rand (DRC +2.58%) was downgraded to ‘Hold’ from ‘Buy’ at KeyBanc.
Clorox (CLX +7.35%) was downgraded to ‘Sell’ from ‘Neutral’ at B. Riley.
Bed Bath & Beyond (BBBY -0.25%) was downgraded to ‘Market Perform’ from ‘Outperform’ at William Blair.
Fluor (FLR -2.46%) was downgraded to ‘Market Perform’ from ‘Outperform’ at Wells Fargo.
Cree (CREE -1.92%) was upgraded to ‘Equal Weight’ from ‘Underweight’ at Stephens.
Siemens (SIEGY -0.85%) was downgraded to ‘Equal Weight’ from ‘Overweight’ at Barclays.
Dick’s Sporting Goods (DKS -1.61%) was downgraded to ‘Market Perform’ from ‘Outperform’ at William Blair.
Herbalife (HLF -10.31%) rose nearly 3% in after-hours trading after sources close to the matter said that billionaire activist investor Carl Icahn has not sold out of his stake in the company
AEGON (AEG unch) was upgraded to ‘Buy’ from ‘Neutral’ at Goldman Sachs.
Ascena Retail (ASNA -2.36%) slumped over 10% in after-hours trading after it reported Q4 adjusted EPS of 13 cents, well below consensus of 18 cents, and then lowered guidance on fiscal 2015 adjusted EPS to 90 cents-$1.00, weaker than consensus of $1.25.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 FHFA House Price Index
9:45 PMI Manufacturing Index Flash
10:00 Richmond Fed Mfg.
1:00 PM Results of $29B, 2-Year Note Auction
Notable earnings before today’s open: KMX, CCL
Notable earnings after today’s close: AIR, BBBY, CPRT, SCS
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers