Before the Open (Mar 25)

Good morning. Happy Tuesday.
The Asian/Pacific markets leaned to the downside, but only Taiwan (up 1%) moved much from its unchanged level. Europe is currently mostly up. Russia is up 2%; Switzerland, Amsterdam, London, Germany, France and Italy are up 1% or more. Futures here in the States point towards a moderate gap up open for the cash market.

The dollar is up. Oil is up, copper down. Gold and silver are up.
The market got hit hard yesterday…although it bounced during the afternoon session. Considering Mondays are the weakest day of the week and the market sold off Friday afternoon, it should not have been a big surprise. Now it’s “turnaround Tuesday.” Tuesday’s are by far the market’s strongest days…and they’re especially strong when the Monday is weak, as it was yesterday. I guess you can call this a test. If the market can’t rally on the strongest day of the week while the overall trend is still solidly up, then it’s weaker than we think.
On the technical front, the S&P has dropped enough to work off this negative divergence…

The long term trend remains solidly up, and the near term has probably seen enough selling to re-balance the supply/demand balance. But the intermediate term is less encouraging. There are several signs (many of which I covered in the weekend write-up) that suggest a local top is being formed…not THE top, just a top that may last long enough to really scare the bulls. If this is the case, 1800 is my downside S&P target.

If the market bounces today, Wednesday will be key. Do the gains immediately get given back…or will the bulls be in enough control to push the market to new highs? More after the open.
Stock headlines from barchart.com…
BofA/Merrill added CSX (CSX -0.24%) to its top stock pick list for 2014.
Walgreens (WAG -0.68%) reported Q2 adjusted EPS of 91 cents, below consensus of 93 cents.
AT&T (T +0.47%) was downgraded to ‘Neutral’ from ‘Overweight’ at HSBC.
The NYT reports that General Motors (GM +0.37%) told its customers and families of accident victims that it did not have sufficient evidence to determine that there were defects in its cars, even after the company had definitive evidence of such a defect.
Arch Coal (ACI +3.08%) was downgraded to ‘Hold’ from ‘Buy’ at Jefferies.
Navistar (NAV +0.06%) was downgraded to ‘Neutral’ from ‘Buy’ at UBS.
KBR (KBR -0.98%) was downgraded to ‘Neutral’ from ‘Buy’ at Goldman Sachs.
Domtar (UFS +0.08%) was upgraded to ‘Buy’ from ‘Neutral’ at Goldman Sachs.
RealD (RLD -3.39%) and Wanda Cinema Line Corporation announced an extended agreement to install an additional 780 RealD 3D Cinema Systems in China.
Integrated Core Strategies reported a 6% passive stake in Stone Energy (SGY +0.08%) .
Standard & Poor’s Ratings Services lowered its long-term foreign currency sovereign credit rating on Brazil to ‘BBB-‘ from ‘BBB’ with a stable outlook on its long-term credit rating.
PL Capital reported a 5.2% stake in Metro Bancorp (METR +0.98%) .
Disney (DIS -1.07%) has agreed to acquire Maker Studios for $500 million.
BioMarin (BMRN -0.30%) was downgraded to ‘Neutral’ from ‘Buy’ at Goldman.
Blackstone Holdings I reported a 6% passive stake in Ardmore Shipping (ASC -1.77%).
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 New Home Sales
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
1:00 PM Results of $32B, 2-Year Note Auction
4:00 PM Fed’s Lockhart: U.S. Economic Outlook
7:00 PM Fed’s Plosser: Monetary Policy and Economic Outlook
Notable earnings before today’s open: CCL, GIII, HDS, IKGH, MKC, NEOG, WAG
Notable earnings after today’s close: FIVE, GERN, GEVO, GOMO, LNDC, PVH, SCS
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers