Before the Open (Aug 28)

Good morning. Happy Friday.
The Asian/Pacific markets closed mostly up. China rallied 4.8%, followed by Japan (up 3%), Taiwan (up 2.5%) and South Korea (up 1.6%). Hong Kong dropped 1%. Europe leans to the downside, but movement is less than it’s been this week. Switzerland, Hungary and Italy are down more than 1%; London, Germany, Austria, Sweden, Turkey, Denmark, Finland, Portugal and Ireland are also weak. South Africa is down, but most oil producing nations (Saudi Arabia, UAE, Egypt, Nigeria, Qatar) are posting solid gains. Futures here in the States point towards a moderate gap down open for the cash market.
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The dollar is up a small amount. Oil and copper are down. Gold and silver are pretty much flat. Bonds lean to the downside.
So let’s see…
The S&P just completed its biggest 2-day rally since the March 2009 bottom, and despite the massive selling to start the week (remember the S&P was down 100 on Monday, the Dow down 1000), the market is up for the week heading into today.
Oil just completed its biggest 1-day move since 2009 and is on track to post a gain for the week for the first time in nine weeks.
We knew there would be big swings in both directions…the market has not disappointed.
The S&P typically trades in daily ranges between 10-14 points. Now it’s covering that type of ground in minutes.
20-point moves were once-in-a-while gifts…now those happen several times/day and take less than 30 minutes to play out.
The S&P traded in a 75-point range for six months…now the daily moves are 75 points.
Over the last two weeks the S&P fell over 200 points and then rallied back more than 100…and that doesn’t include some big swings in the middle.
I’m sticking with what I’ve been saying. Overall I see more downside coming, but because there will be big swings along the way, the market can be played in both directions. Stick with quality if you go long. High quality stocks can be bought on dips, and while I understand the attraction with cheap, lower quality stocks that move more, plenty of old-school stocks are moving big enough to satisfy any movement requirement you have.
But trades are shorter term. When you get in, know your exit – in terms of price and time. Last weekend I posted AAPL, NFLX, NKE, UA, COST and several others as good buys when the market dips. If you’re in, great. Where’s your exit. Have a plan. Don’t fly by the seat of your pants.
Big swings will be the norm right now. The jump in volatility from being very low to being very high is historic. I don’t know when things will calm down, so deal with it. More after the open.
Stock headlines from barchart.com…
BorgWarner (BWA +0.36%) was downgraded to ‘Neutral’ from ‘Outperform’ at Baird.
Teradata (TDC +2.41%) was downgraded to ‘Neutral’ from ‘Overweight’ at Atlantic Equities.
Citigroup (C +2.22%) , U.S. Bancorp (USB +2.83%) and Regions Financial (RF +3.35%) were all upgraded to ‘Buy’ from ‘Neutral’ at Guggenheim.
Ryder (R +2.90%) was upgraded to ‘Strong Buy’ from ‘Outperform’ at Raymond James.
United Continental Holdings (UAL -1.09%) rallied over 2% in after-hours trading after it was announced that it will replace Hospira (HSP +0.09%) in the S&P 500 after the close of trading on Wednesday, September 2.
Activision Blizzard (ATVI +2.35%) gained 6% in after-hours trading after it was announced that it will replace Pall Corp. (PLL +0.43%) in the S&P 500 after the close of trading on Friday.
Baker Bros. Advisors reported a 20.6% stake in Invitae (NVTA +3.17%) .
OmniVision (OVTI +1.12%) reported Q1 adjusted EPS of 46 cents, better than consensus of 39 cents.
Smith & Wesson (SWHC +1.76%) rose 5% in after-hours trading after it reported Q1 adjusted EPS of 32 cents, well above consensus of 22 cents, and then raised guidance on fiscal 2016 EPS view to $1.14-$1.19 from $1.02-$1.07, higher than consensus of $1.04.
ULTA Beauty & Salon (ULTA +1.39%) climbed over 4% in after-hours trading after it reported Q2 EPS of $1.15, better than consensus of $1.12, and then raised guidance on fiscal 2015 sales growth to 8% to 10% from previous guidance of 7% to 9%.
Freeport McMoRan (FCX +28.66%) jumped over 14% in after-hours trading after Carl Icahn reported an 8.46% stake in the company.
GameStop (GME +1.85%) reported Q2 adjusted EPS of 31 cents, higher than consensus of 25 cents.
Aeropostale (ARO +10.53%) reported a Q2 adjusted EPS loss of -56 cents, a slightly bigger loss than consensus of 55 cents.
Autodesk (ADSK +1.77%) dropped over 7% in after-hours trading after it reported Q2 adjusted EPS of 19 cents, higher than consensus of 17 cents, but then lowered guidance on fiscal 2016 adjusted EPS to 60 cents-72 cents, well below consensus of $1.04.
Caleres (CAL +1.63%) lowered guidance on fiscal 2015 adjusted EPS to $1.84-$1.94, below consensus of $1.95.
Earnings and Economic Numbers from seekingalpha.com…
Today’s Economic Calendar
Jackson Hole Symposium
8:30 Personal Income and Outlays
10:00 Reuters/UofM Consumer Sentiment
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers