Before the Open (May 29)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly up. China and Singapore dropped more than 1%; South Korea and Taiwan did well. Europe is currently mostly down. France, Germany, Amsterdam, Stockholm, Switzerland, London, Greece and the Czech Republic are down more than 1%. Futures here in the States point towards a big gap down for the cash market.

The dollar is down. Oil and copper are down. Gold and silver are up.
Yesterday the market gapped up but then drifted down most of the day, and although the indexes closed with gains, they closed in the bottom half of their intraday ranges.
Today will be the 4th consecutive day the market will at least gap moderately at its open. Last Thursday and Friday the market gapped down and then grinded higher most of each day. Yesterday was the opposite. Today’s gap will erase yesterday’s gains and put the market back at Friday’s close.
All these gaps are increasing volatility which is characteristic of a topping pattern, not the typical calmness that takes place when the market trends up.
Also of note is something I mentioned over the weekend. I did not find many good set ups among high-volume large caps. Most of the good ones were lower-volume small or micro cap. Time and again I’d find a good set up and then look at the volume and realize it was too light to play. To me this is a warning. With limited funds, money flows the safe stocks. After that, additional money flows down to the mid and small caps. It’s only when there’s so much money flowing around that needs a home that the POS garbage at the bottom of the exchanges gets bid up. That’s what happening, and in my opinion, it’s a sign of too much fluff. I’m not predicting a top, but I am saying this development may need to be worked about before the market legs up again.
Here are stock-specific stories from barchart…
Brocade (BRCD -1.28%) was downgraded at Morgan Stanley to “Underweight” from “Equal Weight.”
Chico’s FAS (CHS +1.15%) reported Q1 adjusted EPS of 32 cents, weaker than consensus of 36 cents.
William Blair says that Cyberonics (CYBX +0.04%) should be bought at the open and keeps an Outperform rating on the stock.
Brown Shoe (BWS +3.46%) reported Q1 adjusted EPS of 32 cents, well ahead of consensus of 22 cents, and raised guidance on fiscal 2013 EPS to $1.22-$1.29, higher than consensus of $1.23.
SeaWorld (SEAS -0.74%) was initiated with a “Buy” at BofA/Merrill with a target price of $43.
The WSJ reported that Apple (AAPL -0.83%) has agreed to pay $53 million to settle litigation related to warranty coverage for iPhone and iPad customers who were denied coverage under a company policy associated with handling water damage.
William Lyon Homes (WLH -0.68%) rose over 3% in after-hours trading after Paulson Property reported a 10.6% stake in the company.
The WSJ reported that Goodyear Tire (GT +2.54%) told employees that its tire plant in Amiens, France has not received any viable offers.
Steel Excel reported a 14.3% stake in Forbes Energy (FES +0.84%) .
United Natural Foods (UNFI +1.35%) reported Q3 EPS of 64 cents, right on consensus, and Reported Q3 revenue of $1.57 billion, slightly higher than consensus of $1.56 billion. The company also narrowed guidance on fiscal 2013 to $2.12-$2.14 from $2.12-$2.18, lower than consensus of $2.19.
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 29)”

  1. Yes, the market is in the doldrums while at the same time re-pricing bonds and loans. These are to me signs that one can be invested, but with stops and hold new buys. The numbers due Thursday and Friday are likely to set the course for a while, revised GDP will likely be down. The consumer sentiment from Tuesday was just comparatively better, but in the long run probably transitory: they feel better because the news isn’t terrible. Meanwhile, the EU and China continue to indicate that they are unable to resolve their plans quickly or well. Either or both can undo much of the upward bias of the US markets. When the 40 EMA crosses the 200 EMA on the SPY, it is over, go to cash or sht term bonds. Right now it says be in at least the SPY. Finally, we shove off June first.

  2. with much selling on the down tick at extrems on my 2 min tick indicator
    there is only one thing on the menue at the fed and central banks
    and thats a whole load of bull
    will the ponsi implode or the fed explode

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