Buy Favorites on Down Days (WAG, ESRX, AM, NEOG, BA, LYSCF, IOC)

Stocks rallied strongly for the second-consecutive day to start the week on the hopes that a plan to help backstop EU banks and ease the European debt crisis will soon be implemented. However, by the end of the day, the markets were well off their highs. Headlines about Europe are still likely to greatly influence stocks in the weeks heading into Q3 earnings season, so we’d expect the volatility to remain at elevated levels. As such, look to be buyers of favorites on down days, while possibly easing out of some positions on up days.

The Rare Earth Stocks Index was the top performing tickerspy Index on the day, led by Lynas Corporation (LYSCF) with a 24% gain. The Oil Refiner Stocks Index was the day’s worst performing tickerspy Index, with InterOil Corporation (IOC) down -17%.

Stocks rose on the day, with the Dow climbing 147 points to 11,191. The S&P added 12 points, while the Nasdaq jumped 30 points to 2,547. Oil soared $4.21 to $84.45 a barrel, while gold surged $57.70 to $1,652.50 an ounce.

In economic news, the Conference Board said consumer confidence rose slightly in September to 45.4 from 45.2 in August. Economists were expecting a September reading of 46.1. Elsewhere, the S&P/Case-Shiller home price index for 20 major metro areas rose 0.9% month over month in July, good for the fourth-straight month of increases. Still, only Detroit and Washington, D.C. saw home prices increase year over year in July and overall year-over-year sale prices were down -4.1%.

In earnings news, drugstore operator Walgreen (WAG) said its fiscal fourth-quarter profit rose 69% to $792 million, or 87 cents per share, from $470 million, or 49 cents per share, a year earlier. Revenue climbed 6% to $17.96 billion as same-store sales rose 4.4%. On an adjusted basis, Walgreen earned 57 cents a share while analysts were expecting 55 cents. Shares of Walgreen, however, fell -6.3% as it reported no progress in a pricing spat with PBM Express Scripts (ESRX). Nearly 90 pros held Walgreen in their portfolios at the end of Q2 and nearly 670 tickerpsy members own the stock in their portfolios.

Greeting card maker American Greetings (AM) said its fiscal second-quarter soared 71% to $14.5 million, or 35 cents per share, from $8.5 million, or 21 cents per share, a year earlier. Revenue rose 8% to $368.8 million. On an adjusted basis, American Greetings earned 28 cents a share, above the 25-cent consensus. Shares of American Greetings fell -4.3%.

Shares of Neogen (NEOG) plunged -7.6% after the food and animal safety products producer reported a fiscal first-quarter profit of $6.0 million, or 25 cents a share, compared to $5.8 million, or 25 cents a share, a year earlier. Revenue rose 7% to $45.7 million. Analysts had expected a profit if 26 cents on revenue of $47.3 million.

Shares of Dow component Boeing (BA) rose 1.2% after the aerospace giant delivered the first 787 Dreamliner to Japan’s All Nippon Airways. The Japanese airline will put the Dreamliner into service on October 26th. Nearly 60 pros held Boeing in their portfolios at the end of Q2 and nearly 1,260 tickerpsy members own the stock in their portfolios.

Tags: AM, BA, ESRX, IOC, LYSCF, NEOG, WAG