Before the Open (Oct 24)

Posted on by Jason Leavitt

Good morning. Happy Friday.
The Asian/Pacific markets closed mixed. Japan rallied 1%; Australia, Malaysia and New Zealand also did well. Taiwan dropped 1%; Indonesia also did poorly. Europe currently leans to the downside. Germany, France and Amsterdam are all posting decent losses. Austria is up 0.75%. 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 flat.
The market posted a solid gain yesterday, although it closed off its high thanks to some selling pressure the last hour of the day. Now it’ll continue its move down at today’s open. Ebola fears, which subsided a little, have ramped up again because a doctor in NY who treated Ebola patients in West Africa tested positive for the virus.
AMZN will gap down to its lowest level since August 2013. They missed earnings – losing a lot more than anticipated. This marks the third time this year AMZN will suffer a sizable gap down. The company has never turned a profit. For almost 20 years Wall St. has given them a free pass because they were willing to accept losing money in exchange for market share. That free pass ended this year. AMZN needs to circle its wagons, cut unprofitable business units and turn a profit…or else there will be much more downside to go.
I earmarked this week as being very important. The market V-bottomed the previous week, and the bulls needed to follow through this week to put some distance between current prices and the lows. They done that so far. The Wednesday drop is barely noticeable while being surrounded by big rallies Monday, Tuesday and Thursday. Delayed follow through is what we want, and that’s exactly what we got. Absent major news (dozens of Ebola cases popping up in the US) I think a low is in for the year. Sentiment has shifted. The market is doing well, and unless something major rocks the boat, odds favor decent price action into the end of the year.
Stock headlines from barchart.com…
Amazon.com (AMZN +0.07%) fell 10% in pre-market trading after it reported a Q3 EPS loss of -95 cents, a bigger loss than consensus of -74 cents, and then lowered guidance on Q4 revenue to $27.3 billion-$30.3 billion, below consensus of $30.89 billion.
Microsoft (MSFT +1.44%) climbed over 3% in pre-market trading after it reported Q1 EPS of 54 cents, higher than consensus of 49 cents.
Ford Motor (F +1.91%) reported Q3 EPS of 24 cents, better than consensus of 19 cents.
Cabot Oil & Gas (COG +3.12%) reported Q3 EPS of 20 cents, less than consensus of 21 cents.
Colgate-Palmolive (CL -0.41%) reported Q3 EPS of 76 cents, higher than consensus of 75 cents.
Flowserve (FLS +3.25%) reported Q3 EPS of 93 cents, below consensus of $1.00.
Chubb (CB +0.12%) reported Q3 operating EPS of $2.17, stronger than consensus of $1.95, and then raised guidance on fiscal 2014 operating EPS view to $7.35-$7.45 from $6.75-$6.95, above consensus of $7.17.
Edwards Lifesciences (EW -0.07%) reported Q3 EPS of 80 cents, better than consensus of 73 cents.
Hub Group (HUBG +1.59%) reported Q3 EPS of 49 cents, weaker than consensus of 54 cents.
Juniper (JNPR +3.25%) rose 1% in after-hours trading after it reported Q3 EPS of 36 cents, above consensus of 35 cents, and then announced a +$1.1 billion increase in the company’s share repurchase program.
NCR Corp. (NCR -0.36%) reported Q3 EPS of 67 cents, below consensus of 70 cents, and then lowered guidance on fiscal 2014 EPS to $2.60-$2.70 from $3.00-$3.10, well below consensus of $2.88.
Chicago Bridge & Iron (CBI +4.19%) reported Q3 adjusted EPS of $1.51, stronger than consensus of $1.41.
Swift Transport (SWFT -0.18%) rose over 5% in after-hours trading after it reported Q3 adjusted EPS of 39 cents, better than consensus of 35 cents, and hen raised guidance on fiscal 2014 adjusted EPS to $1.29-$1.33, above consensus of $1.27.
W. R. Berkley (WRB +0.81%) reported Q3 EPS of $1.42, well above consensus of 90 cents.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
10:00 New Home Sales
Notable earnings before today’s open: AAN, AVY, B, BMY, CHH, CL, COG, DLPH, DTE, EDU, ERIC, F, FLIR, FNFG, IDXX, IMGN, IMS, LEA, LPNT, LYB, MCO, MGLN, NDAQ, OCR, PG, SFE, SHPG, STT, SXC, TCB, UPS, VTR, WBC, WYN
Notable earnings after today’s close: none
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Oct 24)”

  1. seeing too many confused indicators. CAUTION is the word. WE ARE SUSPICIOUS THAT RALLY is wanted by hedges. US little folk are having a time in fall/ Christmas season. Seems to say buy some indexes and chill out to year end. CHEERS maybe, but the timing says a large down move is due, what say you?

  2. Jason;
    This is your bold prediction? “The market is doing well, and unless something major rocks the boat, odds favor decent price action into the end of the year.”
    Clearly if the price of oil stays consistently at or below the 80’s, all industries having a large transportation cost component should do well in the 4th qtr, especially as the holiday season approaches. I like LUV?
    Will spenders return?

    1. I look at the structure of the charts, the indicators and get a feel for market sentiment and then develop a bias. The market can always change, but given what I see right now, my bias is to the upside. I’d love one more dip to shake confidence again, and as long as something major doesn’t happen in the world, yes I favor the upside into the end of the year.

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