Before the Open (May 28)

Posted on by Jason Leavitt

Good morning. Happy Tuesday. Hope you enjoyed your weekend and extra day off.
The Asian/Pacific markets closed mostly up. China, Hong Kong, Indonesia and Japan rallied more than 1%. Europe is currently up across-the-board. France, Germany, Amsterdam and London are up more than 1%. Futures here in the States point towards a relatively big gap up open for the cash market.

The dollar is up slightly. Oil and copper are up. Gold and silver are down.
After a 4-week winning streak, the market dropped last week. The losses weren’t extreme…I’d consider the limited selling pressure to be perfectly normal for a strong market. The indicators are now split. Some are positioned to support a leg up; others need to cycle a little more before supporting a rally. We’ll see. By several measures the rally we’re in is like that have come before, and during parts of the rally, the market has completely ignored all technical developments and just kept plowing forward. Until its character changes, it would be foolish to expect a change. The market is what it is until it changes…just a trend is what it is until it reverses.
Having said this there are less good set ups right now, and many of the good ones are low-volume or cheap stocks. This is an interesting development. It’s as if there’s so much money flowing that needs a home, it has trickled down to the bottom-of-the-barrel stocks – many of which shouldn’t even be publicly traded companies. I wonder if this is a sign of too much fluff out there.
Here are stock specific news from barchart.com…
W.R. Grace (GRA -0.74%) was initiated with a “Conviction Buy” at Goldman with a price target of $105.
BMO Capital upgraded Kansas City Southern (KSU -0.56%) to “Market Perform” from “Underperform” due to an expected recovery in agriculture and coal volumes and raised their price target to $107 from $93.
Anadarko (APC -0.33%) was added to short-term buy list at Deutsche Bank.
Jabil Circuit (JBL +0.21%) was initiated with a “Buy” at Standpoint Research who has a price target of $28.
TECO Energy (TE -0.81%) will acquire New Mexico Gas for $950 million.
Broadcom (BRCM -0.46%) was downgraded at Susquehanna to “Neutral” from “Positive” due to valuation.
Tiffany & Co. (TIF +0.03%) reported Q1 EPS of 70 cents, much better than consensus of 53 cents.
Google (GOOG -1.07%) rose more than 1% in pre-market trading after the WSJ reported the company plans to introduce a new online video channel.
Merck (MRK -0.36%) was upgraded to “Buy” from “Hold” at Jefferies who raised their price target for the stock to $54 from $48.
News Corporation (NWSA +0.67%) disclosed in a regulatory filing that certain of its goodwill and intangible assets were potentially impaired and that it expects to record a pre-tax non-cash impairment charge in the range of $1.2 billion-$1.4 billion in Q4 related to its publishing segment.
Berkshire Hathaway boosted its stake in DaVita (DVA -0.35%) to 14.2% from 13% and raised its passive stake in DirecTV (DTV -0.28%) to 6.7% from 5.8%.
headlines at Yahoo Finance
headlines at MarketWatch
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (May 28)”

  1. Still marching upward towards that 1700-1710 target ( ES futures) based on fib methodology. Goes along with what you say, Jason, “Until its character changes, it would be foolish to expect a change. The market is what it is until it changes…just a trend is what it is until it reverses.”

  2. at last we have the pitch fork or retest top so loved by insto computers
    and on fed /central bank tues
    some markets like nas 100 have made marginal new highs some marginal lower tops-german dax/ftse ect
    may the bears now grow like rabits consuming all those rediculous bull investos
    the upcoming island prison will contain all the bulls in deap freeze

  3. This market is like the energizer bunny. It just keeps going and going. Even the best batteries run out of power at some point. Normally I would have shorted into this AM’s gap up. Today is just a dry powder day.
    I can’t help but be a little short in this market. It is just a fat hog waiting to be butchered. Too bad my broker does not call me up and tell me when the market is going to drop. Even so would I believe him?

  4. Midday this dog lacks strength (volume), but not guts. The push up is admirable but likely a sign that this is the summer play. No sell in may so long the traders known the Fed is there for them.
    What must concern all is what this leads to. Concerned but long.

  5. intense insto computer selling into strenght as indicated on my 2 minute tick indicator with many negative extream readings
    selling may have peaked with latest large negative extream –at least for 1 hour
    then the computers will eat up all the remaining bulls on a slow frizel

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