Before the Open (May 22)

Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets closed with a lean to the upside. Japan, Hong Kong, South Korea and Australia posted gains; China and Indonesia fell.Europe currently leans to the upside, but movement is minimal. The UK, Turkey, Greece, Switzerland and Austria are up; Italy is down. Futures in the States point towards a flat open for the cash market.
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
We enter this week with mixed, neutral and somewhat confused picture.
The quality and quantity of trading set ups has improved, but the internals have weakened. The 10-day of the AD line is sitting at the bottom of its range. New highs have completely fallen off, and the high-low differentials are trending down. The bullish percent charts are moving down. The percentage of stocks above various moving averages are either trending down or sitting near low levels.
If the market attempts to rally, the internals must immediately improve. Simple as that. We can’t have the number of stocks trading above their 20-EMAs declining while the market moves up. This divergence can last a few days but no long. It’s okay if the market is top-heavy, but we do need some participation other than a handful of stocks pulling it up.
Stock headlines from barchart.com…
Ford Motor Co. (F +0.74%) is up 3% in pre-market trading on news that the company is replacing CEO Mark Fields with Jim Hackett.
Huntsman (HUN +3.37%) jumped over 5% in pre-market trading after Clariant AG agreed to buy the company in an all-stock deal valued at about $6.4 billion.
Mylan (MYL -0.55%) rose over 1% in pre-market trading after it was upgraded to ‘Overweight’ from ‘Equal Weight’ at Barclays.
Qualcomm (QCOM +2.76%) gained more than 1% in pre-market trading after it was upgraded to ‘Overweight’ from ‘Neutral’ at JPMorgan Chase.
Plains All American (PAA +2.24%) was upgraded to ‘Outperform’ from ‘Market Perform’ at Raymond James with a 12-month target price of $32.
Nutanix (NTNX unch) was upgraded to ‘Buy’ from ‘Neutral’ at Goldman Sachs with a 12-month target price of $31.
Zoe’s Kitchen (ZOES +1.68%) was downgraded to ‘Neutral’ from ‘Outperform’ at Baird.
Applied Optoelectronics (AAOI -0.69%) was initiated with a ‘Strong Buy’ at Needham & Co. with a 12-month target price of $85.
Scotts Miracle-Gro (SMG +0.88%) was rated a new ‘Gradually Accumulate’ at Great Lakes Review with a 12-month target price of $105.
Myovant Sciences Ltd (MYOV +0.17%) climbed 4% in after-hours trading after it said a Phase 2 study by Takeda of relugolix in Japanese women with endometriosis-associated pain met its primary endpoint and significantly reduced pelvic pain versus a placebo.
Today’s Economic Calendar
8:30 Chicago Fed National Activity Index
10:00 Fed’s Kashkari speech
7:00 PM Fed’s Reserve Gov. Lael Brainard speech
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings from Morningstar
this week’s Economic Numbers/Reports powered by ECONODAY