Before the Open (Jan 14)

Good morning. Happy Tuesday.
The Asian/Pacific markets closed mostly down. Japan dropped 3.1% and Australia 1.5%. China rallied 0.9%. Europe is currently mostly down, but only Greece (down 1.5%) is down much. Futures here in the States point towards an up open for the cash market.

The dollar is up slightly. Oil is up, copper is flat. Gold and silver are down.
After many slow days, the negative divergence I’ve been posting finally asserted itself yesterday. Here’s the weekly…

But before you freak out and assume the show is over and a downtrend is inevitable, check out the other big down days over the last six months. Only the mid-August drop followed through much; the others reversed soon after.

Pullbacks happen. They are normal and necessary, so don’t panic just because they happen. It’s like getting a bad pitch to hit. No biggie. Keep the bat on your shoulder and wait for the next one. Except in this case the next one might not be for a couple days or couple weeks.
On a short term basis, the biggest reason for concern is the declining breadth indicators. They’ve been moving down for a couple weeks (as I’ve noted in the weekly report).
On a longer term basis, the biggest cause for concern is the growing assumption the market is going to do well during the Q1, do poorly during the Q2 and Q3 and then rally into the end of the year. Maybe it happens, but in order for the market to do well during Q1, people have to buy. They can’t just sit and wait for others to buy. If everyone assumes the market will move up, who is left to buy?
Play it safe here. More after the open.
Stock headlines from barchart.com…
JPMorgan Chase (JPM -1.35%) reported Q4 EPS of $1.40, better than consensus of $1.37.
Stanley Black & Decker (SWK -1.56%) was upgraded to ‘Buy’ from ‘Hold’ at KeyBanc.
Nokia (NOK -2.44%) was downgraded to ‘Underperform’ from ‘Market Perform’ at Raymond James.
Family Dollar (FDO -3.68%) was downgraded to ‘Underweight’ from ‘Equal Weight’ at Barclays.
Jabil Circuit (JBL -2.53%) was upgraded to ‘Conviction Buy’ from ‘Neutral’ at Goldman.
Qualcomm (QCOM -0.88%) was downgraded to ‘Market Perform’ from ‘Outperform’ at Raymond James.
Intel (INTC -0.12%) was upgraded to ‘Overweight’ from ‘Neutral’ at JPMorgan with a $29 price target.
Danaher (DHR -1.97%) was upgraded to ‘Buy’ from ‘Neutral’ at BofA/Merrill.
General Mills (GIS -0.97%) was downgraded to ‘Underweight’ from ‘Equal Weight’ at Morgan Stanley.
WellPoint (WLP -1.25%) raised guidance on fiscal 2013 adjusted EPS to $8.52 from ‘at least’ $8.40, above consensus of $8.51.
Standard & Poor’s Ratings Services placed its ratings on Sears Holdings (SHLD -3.41%) on CreditWatch with negative implications following Sears’ earnings guidance update that results for Q4 ending Feb. 1 will be much weaker than expectations.
Yum! Brands (YUM -2.15%) gained 1% in after-hours trading after it reported that December same-store sales increased an estimated 2% for its China Division, but then reversed and fell over 1% after it reported its Q4 same-store sales declined an estimated 4% for the China Division.
Google (GOOG -0.64%) climbed 1.3% in pre-market trading after announced that it has entered into an agreement to buy Nest Labs for $3.2 billion in cash.
Bloomberg reported that Charter (CHTR -1.61%) offered to buy Time Warner Cable (TWC -0.72%) for about $132.50 a share, but then the Time Warner Cable board rejected the Charter offer, calling it ‘grossly inadequate.’
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Retail Sales
8:30 Import/Export Prices
8:55 Redbook Chain Store Sales
10:00 Business Inventories
Notable earnings before today’s open: CBSH, JPM, LEDS, SJR, WFC
Notable earnings after today’s close: LLTC
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers