Before the Open (Jan 19)

Good morning. Happy Tuesday. Hope you had a great weekend.
The Asian/Pacific markets closed up across-the-board. China rallied 3.2%, Hong Kong 2.1%, Singapore 1.8% and India 1.2%. Europe is currently posting solid gains. Austria and Norway up more than 3%; London, Germany, France, the Netherlands, Sweden, Switzerland, Russian, Greece, Poland, Finland, Portugal and Spain are up more than 2%. Future in the States point towards a big gap up open for the cash market.
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The dollar is up. Oil and copper are up. Gold is down, silver is up. Bonds are down.
So here we go again…a big gap up to start the day. It happened a couple times last week, but sellers always pushed prices right back down. Now it’s happening while most of the breadth indicators have moved to extreme levels. Timing is everything in trading. A bounce attempt when the market isn’t quite ready gets sold into. Now the market will try again when there is much more support.
The selling pressure of the last two weeks was mostly orderly. Despite the start of the year being the most extreme in history, there were very few panic moments, and the VIX didn’t surge like one would think. It surged much more in August, even though that bout of selling lasted less than a week.
A very normal “bounce within a newly-formed downtrend” can take the S&P up 80 points and last a couple weeks. So even if you’re bearish and believe lower prices are coming, don’t be too quick to go short. A bounce will allow the charts to reset and give is some better entries.
For now we are due for some upside. If today’s opening gap can’t fill in the first hour or so, much more upside is coming…and then the market will gap up tomorrow and not buyers in.
Overall my bias is to the downside, but in the near term – the next 1-2 weeks – I favor the upside. More after the open.
Stock headlines from barchart.com…
Bank of America (BAC -3.54%) reported Q4 EPS of 33 cents, higher than consensus of 27 cents.
UnitedHealth Group (UNH -1.35%) reported Q4 EPS of $1.40, better than consensus of $1.38.
M&T Bank Corp. (MTB -2.54%) reported Q4 EPS of $2.05, above consensus of $1.97.
Delta Air Lines (DAL -1.85%) reported Q4 EPS of $1.18, below consensus of $1.19.
Burlington Stores (BURL +2.01%) were upgradd to ‘Buy’ from ‘Hold’ at BB&T.
McDonald’s (MCD -1.23%) was upgraded to ‘Buy’ from ‘Neutral’ at BTIG with a price target of $130.
Bed Bath & Beyond (BBBY +0.36%) was downgraded to ‘Underweight’ from ‘Hold’ at BB&T.
Michael Kors Holdings Ltd. (KORS -1.50%) was upgraded to ‘Neutral’ from ‘Underweight’ at Piper Jaffray.
Novartis (NVS -2.99%) rose +0.5% in after-hours trading after its Cosentyx drug was approved by the FDA for the treatment of active ankylosing spondylitis and psoriatic arthritis.
Constant Contact (CTCT +3.36%) said it sees Q4 revenue of $93.6 million, below estimates of $95.5 million.
Hortonworks (HDP -3.72%) reported a preliminary Q4 revenue estimate of $37 million-$38 million, better than consensus of $34 million.
Reuters reported that Telefonica has expressed interest in buying AT&T’s (T -0.90%) $10 billion of pay TV assets in Latin America.
Consolidated-Tomoka (CTO -0.88%) said its board authorized solicitation of proposals from financial advisers to advise the company on options for maximizing shareholder value.
Earnings and Economic Numbers from seekingalpha.com…
Today’s Economic Calendar
10:00 NAHB Housing Market Index
4:00 PM Treasury International Capital
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers