Before the Open (May 11)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mixed. Hong Kong and India closed down; Australia, Indonesia, Malaysia and New Zealand closed up. Europe is currently mostly down. Spain, Italy, Portugal and Austria are down more than 1%; Germany, France, the Netherlands, Sweden, Belgium and Greece are also weak. Russia is up more than 1%; Norway is also doing well. Futures here in the States point towards a down open for the cash market.
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
There are many big, pre-market movers.
Office Depot (ODP) is down 34%, and Staples (SPLS) is down 15% after a judge blocked their merger. Fossil (FOSL) is down 33% after they missed earnings and guided lower. Disney (DIS) is down after missing earnings – the first time in five years. Soda Stream (SODA) is up 24% on strong sales growth.
This is a key time right now for the market. We entered this week with a slight upward bias, but we felt the market needed to bounce or else the floor would be pulled out. After a slowish day Monday, we got a solid up day yesterday. Some follow through would invalidate the head-n-shoulder top some technicians have noted on the S&P. Failure to push higher in the next few days would be a warning. A couple up days after a 2+ week drop is not hard. Following through after short covering has exhausted itself is harder and more telling. That’s where we’re at right now. The bulls can’t relax yet.
Stock headlines from barchart.com…
Office Depot (ODP -2.72%) plunged over 30% in pre-market trading after a U.S. federal judge late yesterday blocked the $6.3 billion merger between Office Depot and Staples. Staples (SPLS +0.58%) is down 15% in pre-market trading.
Walt Disney (DIS +1.20%) fell over 5% in pre-market trading after it reported Q2 adjusted EPS of $1.36, below consensus of $1.40.
Alaska Air Group (ALK +0.77%) gained nearly 2% in after-hours trading after it was announced that it will replace SanDisk in the S&P 500 at the close of trading Thursday, May 12.
Electronic Arts (EA +0.03%) jumped nearly 7% in pre-market trading after it reported Q1 adjusted EPS of 50 cents, better than consensus of 42 cents, and then raised guidance on fiscal 2017 adjusted net revenue to $4.9 billion, higher than consensus of $4.83 billion.
Fossil Group (FOSL +1.73%) plunged over 30% in pre-market trading after it reported Q1 EPS of 12 cents, below consensus of 15 cents, and then lowered guidance on 2016 GAAP EPS to $1.80-$2.80 from a February 16 estimate of $2.80-$3.60, well below consensus of $3.05.
Nuance Communications (NUAN +3.24%) dropped nearly 6% in after-hours trading after it lowered guidance on 2016 adjusted revenue to $1.975 billion-$2.005 billion from a February 9 estimate of $1.98 billion-$2.03 billion.
Blue Buffalo Pet Products (BUFF unch) rallied nearly 5% in after-hours trading after it reported Q1 adjusted EPS of 19 cents, higher than consensus of 18 cents, and then raised guidance on the low end of its 2016 adjusted EPS view to 73 cents-74 cents from a Mar 8 estimate of 72 cents-74 cents.
Intrexon (XON +1.98%) fell nearly 3% in after-hours trading after it reported a Q1 loss of -55 cents a share, more than twice expectations for a -24 cent loss per share.
Planet Fitness (PLNT +1.36%) gained 5% in after-hours trading after it reported Q1 pro forma adjusted EPS of 15 cents, better than consensus of 13 cents, and then raised guidance on full-year EPS to 62 cents-65 cents from a prior view of 60 cents-63 cents.
Laredo Petroleum (LPI +2.20%) slipped nearly 4% in after-hours trading after it announced plans for a 9.5 million share secondary offering.
Albemarle (ALB +0.86%) climbed nearly 5% in after-hours trading after it reported Q1 net sales of $865.4 million, higher than consensus of $814.9 million, and then raised guidance on full-year EPS to $3.90-$4.25 from a prior view of $3.45-$3.90, higher than consensus of $3.66.
Rocket Fuel (FUEL +1.13%) surged over 20% in after-hours trading after it reported a Q1 adjusted EPS loss of -28 cents, half as much as consensus of a -56 cent loss.
Prospect Capital (PSEC +1.79%) fell over 1% in after-hours trading after it reported Q3 net investment income of 25 cents, below consensus of 26 cents.
Tuesday’s Key Earnings
Allergan (NYSE:AGN) +5.1% authorizing up to $10B in share repurchases.
Credit Suisse (NYSE:CS) +4.2% on expense cuts and overall downsizing.
Disney (NYSE:DIS) -6.2% AH following its first earnings miss in 5 years.
Electronic Arts (NASDAQ:EA) +6.6% AH on a record year for revenue/profit.
Lumber Liquidators (NYSE:LL) -7.8% after heavily missing estimates.
Nokia (NYSE:NOK) -6.7% following weak earnings in Q1.
SodaStream (NASDAQ:SODA) +23.7% on double-digit sales growth.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
1:00 PM Results of $23B, 10-Year Note Auction
2:00 PM Treasury Budget
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (May 11)”

  2. Some nasty adjustments taking place (beans made bucks yesterday), Macys Disney, etc. show the economy and spending are weak. Much care is required as we adjust to the new reality – the new politics isn’t reassuring to say the very least. Cash, some gold/silver are likely to work to ward personal stability. Best.

  3. oil is setting up for another leg up. should get to 50 or a bit higher this time. i expect 50s to halt the momentum for longer than the consolidations so far. but the cat is out of the bag for the longer term. we can set quite high targets. i will share them once i see the behavior in the 50s and the ensuing pullback. fundamentally, i can say that it can get to 70 without any major shifts in the landscape. beyond that needs to be evaluated a bit more carefully. remember, i am in the energy industry in my day job.

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