Before the Open (Oct 9)

Good morning. Happy Thursday.
The Asian/Pacific markets closed mostly up. India, Hong Kong, Australia and Singapore rallied more than 1%. Japan dropped 0.75%. Europe currently leans to the upside, but there isn’t much movement. Greece is up 1.3%, followed by Belgium (up 0.6%), Russia (up 0.55%) and Germany (up 0.51%). Futures here in the States point towards a gap down open for the cash market.

The dollar is down. Oil is down, copper is up. Gold and silver are up.
For the second time in five days the market V-bottomed and rallied vigorously. When I look for signs a bottom may be in place, I want a follow through day several days after the first big up day. That’s because the first move off a depressed level is the easy move. Longs have sold, shorts have built up positions, the pendulum swings too far to one side. A combination of short covering and bottom fishing momentum traders (or computers) can easily push the market up for a couple days. After all, the biggest up moves take place within downtrends. But once that initial buying pressure is exhausted, real buying needs to take place by longer term investors and institutions, not just short term traders being active. Hence why I look for a follow through day several days later…I want buying to take place outside that initial surge. That’s what we got yesterday, but the Russell dropped to a new low before it happened, and the S&P 500 got pretty close. Does it count as a delayed follow through day if the indexes first give all or most of their recent gains back? I think of delayed follow through taking place after a couple days of consolidation, not a full-blown swing down. We’ll see.
Yesterday morning I posted: “It’s getting too late to go short. Risk/reward isn’t very good. Don’t give profits back if we get a surprise bounce.”
For now my bias is to the upside.
Stock headlines from barchart.com…
Apple (AAPL +2.08%) was upgraded to ‘Outperform’ from ‘Perform’ at Oppenheimer.
Endo (ENDP +3.80%) will acquire Auxilium (AUXL -0.57%) in a cash and stock transaction valued at approximately $2.6 billion.
Toyota Motors (TM +0.38%) was upgraded to ‘Buy’ from ‘Neutral’ at BofA/Merrill Lynch.
Colgate-Palmolive (CL +1.42%) was downgraded to ‘Market Perform’ from ‘Outperform’ at BMO Capital.
Vulcan Materials (VMC +1.24%) was upgraded to ‘Buy’ from ‘Neutral’ at Longbow with a price target of $70.
Men’s Wearhouse (MW +1.07%) was initiated with a ‘Buy’ at Jefferies with a price target of $60.
PepsiCo (PEP +0.90%) reported Q3 EPS of $1.36, better than conensus of $1.29.
Nuance (NUAN +0.41%) rose over 2% in after-hours trading following rumors that Carl Icahn will recommend that Apple buy the company.
Tesoro (TSO +4.13%) was initiated with a ‘Buy’ at Deutsche Bank with a price target of $81.
Digiies reports that Q3 worldwide PC shipments declined -1.7% on year.
GrubHub (GRUB +2.51%) rose nearly 1% in after-hours trading after it was initiated with a ‘Buy’ at CRT Capital with a price target of $44.
Karpus Management reported an 8.63% stake in Chase Industries (CSI -0.10%) .
Alcoa (AA +0.75%) jumped nearly 3% in after-hours trading after it reported Q3 adjusted EPS of 31 cents, well above consensus of 23 cents.
Gap (GPS +1.70%) slumped nearly 8% in after-hours trading after the company named Art Peck to succeed Glenn Murphy as CEO.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
Chain Store Sales
8:30 Initial Jobless Claims
10:00 Wholesale Trade
10:30 EIA Natural Gas Inventory
1:00 PM Results of $13B, 30-Year Note Auction
11:00 Mario Draghi Speech
3:40 PM Fed’s Williams: Economic Outlook
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today’s open: LNN, PEP
Notable earnings after today’s close: ANGO, CUDA, HELE, VOXX
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers