Why stock market's dazzling two days are a reason to worry
MARKETWATCH 9:01 AM ET 12/19/14 Symbol Last Price Change NKE 97.08up 0 (0%) RHT 61.5up 0 (0%) PIR 13.9down 0 (0%) KMX 60.53up 0 (0%) AAPL 112.65up 0 (0%) BABA 109.25 0 (0%) JUNO 0 0 (0%) CUBA 9.2down 0 (0%) TSLA 218.26down 0 (0%) GOOG 511.1up 0 (0%) NFLX 334.42up 0 (0%) QUOTES AS OF 04:00:10 PM ET 12/18/2014 Critical intelligence before the U.S. market opens
Half a century ago, the Beatles made their debut on the Ed Sullivan Show, a broadcast moment that forever changed the course of music history. When the Fab Four left the stage that night amid the din of screaming girls, the host stepped up to announce the next act. Good luck.
"Here's a very amusing magician we saw in Europe and signed last summer," Sullivan said. "Let's have a nice hand for him -- Fred Kaps!" Ouch. A perfectly fine performance, apparently. Too bad for him that he just followed Paul, John, George and Ringo.
Today's market is Fred Kaps.
That might be overstating it -- this is financial "news," after all -- but there's no denying the past two days have been a combo to remember. It's been three years since the S&P has delivered a return like we saw on Wednesday and Thursday. The Dow hadn't seen back-to-back days of 200 points or more in six years. The stock market's version of "She Loves You."
But not everybody's drinking the bull-market eggnog. Jared Dillian of Mauldin Economics says it's time to start asking the tough questions when market volatility goes off the rails. As in, the VIX (VIX), for the first time ever, has gone from 11 to 20 in just four days.
"These are not normal times. And the bull market in stocks is very, very advanced," he said. "I haven't seen anything like this before. New territory here -- and not in a good way. I'm a student of volatility and credit, and I paid attention in early 2009 when no put option was too expensive and no bond was safe. It feels as if something like that might be in our future.
Not in the immediate future, though. Fred Kaps could be about to pull a rabbit out of his hat.
Key market gauges
Hard to imagine there's much to propel stocks forward this morning, but it's shaping up to be another up day, at least at the start. Futures on the Dow (YMZ4) and the S&P (ESZ4) are off some much bigger gains earlier, but still up 0.3%. Asia, taking a cue from the U.S., exploded to the upside, led by the Nikkei . Europe has giving up its gains. Gold(GCG5) is closing in on $1,200 an ounce. Crude(CLF5) is closing in on $55 a barrel.
Earnings
Nike (NKE) shares are down more than 2% in premarket trades after the shoe maker offered up a downbeat forecast for future orders. The stock added almost 3% to flirt with an all-time high on Thursday. Read: Nike(NKE) tops targets but orders view soft.
Elsewhere, Red Hat(RHT) shares are up double-digits after it's strong numbers, while Pier 1 Imports(PIR) is luring in the buyers with a strong third-quarter report.
BlackBerry (RIMM) shares are down 7% in premarket. Seems no one's happy with its results suggesting a turnaround is ahead of schedule.
CarMax's (KMX) profits and sales rose ahead of expectations and shares are popping higher in premarket.
The buzz
We'd heard plenty about this stuff going on, but we've lacked some of the visuals. Not anymore. Here's the BBC going deep behind the scenes in China to show footage of workers falling asleep on iPhone assembly lines and of children dangerously digging in mud pits for tin ore. Of course, that's a small price to pay to feed my "Clash of Clans" addiction. For what it's worth, Apple(AAPL) shares are up premarket, and that's usually enough for investors.
Watch out for the dreaded lock-up expiration in Alibaba(BABA) shares today. So far, nobody seems to worried, with the stock up slightly premarket. These things often apply some selling pressure, especially when it comes to a relatively fresh stock like Alibaba(BABA), but this lockup only represents 1.6% of shares currently eligible to trade, according to Bloomberg.
Aratana Theraputics (PETX) is a huge winner this morning. Shares are up almost 30% after the pet medication company said a study showed its canine osteoarthritis pain drug performed significantly better than a placebo. Another " Therapeutics" is set to make a splash today, with Juno Therapeutics(JUNO) having priced its IPO above the expected range at $24 a share.
Herzfeld Caribbean Basin Fund (CUBA) exploded on Tuesday for a near-30% gain on news of the economic liberation of Cuba. Shares followed up on Thursday with another 4.8% increase. Buyers are still sniffing around this morning, but Josh Brown of the Reformed Broker blog isn't one of them. "You've got shareholders in this that have been waiting forever for this to happen," he said. "I expect many will sell the news." Maybe. But not yet.
The chart of the day
J.C. Parets of the All Star Charts blog calls the outperformance of the utilities (XLU) "one of the more powerful themes around the world" as we head into 2015. "Short-term, yea, utilities did great this year. No doubt about it," he said. "But structurally they've barely even broken out." The worry, of course, is that rising interest rates will cripple this trend, but Parets doesn't see it this way. "I think if this breakout is for real and can take out those April highs marked by the red horizontal line, we could really be off to the races. Not only can this be a great trade for 2015 (again), but would signal that interest rates aren't going anywhere."
The call of the day
Having Wall Street on your side isn't always a blessing, of course, so take this tidbit with a grain of salt. No other tech company on the Nasdaq 100, yes TECH, is expected to perform better than Tesla Motors(TSLA) in the coming year, according to FactSet numbers cited by CNBC. Tesla shares are expected to hammer out a 30% advance in 2015, based on the average analyst price target. That's better than Google(GOOG) , Netflix(NFLX) and Apple(AAPL), the data showed.
Random reads
Living on Venus. Aboard flying airships. I choose death.
Cancelling "The Interview" is one thing, but cancelling "Team America" too? Still confused about this whole Sony thing? Here's Clooney to explain.
Loch Ness monster, Mel Gibson's Scottish accent, and these ice pancakes.
And so ends the Colbert Report.
Compare your drinking habits with this handy booze calculator.
Don't really need People magazine to tell us THIS about Kate Upton. She secured this honor years ago with the "Cat Daddy" demo.
Need to Know starts early and is updated until the opening bell, but sign up hereto get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7 a.m. Eastern.
News 
Market Data 
Discover 
AI
