Before the Open (Jul 8)

Posted on by Jason Leavitt

Good morning. Happy Tuesday.
The Asian/Pacific markets are mixed. India is down 2%; Japan is down 0.4%, Singapore 0.25%. Indonesia is up 0.7%. Europe is currently mostly down. Belgium and Russia are up about 1%; Greece is down 3.4%, Austria 1.9%, Prague 1.7%, Italy 1.2%, Spain 0.8% and London, France & Germany about 0.5%. Futures here in the States point towards a down open for the cash market.

The dollar is up. Oil is down, copper is up. Gold and silver are up.
Yesterday the Dow and S&P dropped a small amount…the Nas dropped moderately…the Russell small caps got hit hard. I’m sure the bears will pound their chests and claim this is a top, and maybe they’ll be right. After guessing wrong over and over, they are bound to be right eventually.
Given the extent of the moves the last 6-10 weeks and the divergences I noted in the Weekly Report over the weekend, I’ve shifted to more of a management mode. That’s when I’m more interested in keeping what I have instead of entering new positions.
The market changes personality, and we need to slightly change our style based on what the state of things is. It’s the difference between a baseball hitter having a 2-0 count with nobody on base an no outs (the pitcher doesn’t want to walk the hitter) vs. having runners on second and third with one out (the pitcher doesn’t mind walking the hitter to set up a double play). Drastic changes aren’t needed but mental awareness that the pitcher isn’t likely to give the hitter a good pitch to hit should be recognized.
I like the market overall, but we need to see if yesterday was the beginning of a shallow pullback or something bigger.
Stock headlines from barchart.com…
The Fresh Market (TFM -3.34%) was downgraded to ‘Sell’ from ‘Neutral’ at Goldman Sachs.
3M Company (MMM -0.34%) was upgraded to ‘Buy’ from ‘Hold’ at Argus.
Range Resources (RRC -2.05%) was upgraded to ‘Hold’ from ‘Reduce’ at KLR Group.
Covidien (COV -1.05%) and Medtronic (MDT -1.46%) were both added to short-term buy list at Deutsche Bank.
Groupon (GRPN -3.30%) was upgraded to ‘Buy’ from ‘Neutral’ at B. Riley.
Guess (GES -0.47%) was upgraded to ‘Overweight’ from ‘Neutral’ at Piper Jaffray with a price target of $32.
Rio Tinto (RIO -0.97%) was upgraded to ‘Overweight’ from ‘Equal Weight’ at Barclays.
CA Technologies (CA +0.10%) lowered guidance on fiscal 2015 EPS view to $2.42-$2.49 from $2.45-$2.52, below consensus of $2.50.
683 Capital reported an 18.9% stake in Body Central (BODY -3.75%) .
Full Moon reported a 15.4% passive stake in Cellular Biomedicine (CBMG +1.72%) .
Vertex (VRTX -1.98%) was downgraded to ‘Perform’ from ‘Outperform’ at Oppenheimer.
Novel Century Ventures reported a 15.46% passive stake in ExOne (XONE -10.76%) .
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $27B, 3-Year Note Auction
1:00 PM Fed’s Lacker: Economic Outlook
1:45 PM Fed’s Kocherlakota: Monetary Policy
3:00 PM Consumer Credit
Notable earnings before today’s open: none
Notable earnings after today’s close: AVAV, AA, BOBE, TCS
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Jul 8)”

  1. Good morning, all.
    Returned from travel last night, so getting my bearings this morning. Will give you a quick-look for now, refine it in a little while if need be.
    As Jason says, is this a pullback to reload or the start of a downtrend?
    Here’s one way to answer that. [My numbers might be off by a point, but these are very close]:
    They brought us down to a fairly significant support level which the futures are reacting to premarket: SPX equivalent 1974, a bit lower than Mon’s aft’noon low. That support is valid down to about 1971. If that holds, they’ll target 1990 for the next few days. There will be resistance at 1980 thru 1982.
    If it breaks, there is other support about 10 points lower.
    Futures -4.5 at 905 am.

        1. Looks like they’re seeking the support at 1963 (extends to 1958). They often penetrate support, but then again sometimes they front run it (so far they have fronted it by 3 futures ticks.)

          2. Instead of tapping the specific level exactly, they get within a few ticks and reverse. So far, with this last low, they’ve gotten within .5 of a point of the support. Looks to me like they’ll get there exactly.

          3. Looking good so far. Stop is 1958, target is 1994
            Nearest resistance is 1967, then 1971.

  2. The market is dropping with the PC ratio is sky high.. I can only think of times when a man made crisis was about to hit that this happened. 911 comes to mind but there were others. Putin, Obama China North Korea? Don’t know.

    1. i was wondering the same thing..pc at 1.02 and market is acting lethargic and looking for a catalyst for the next move…fed notes out on Wednesday…

  3. nas 100 and nq futures hit S5 support piviot others S4 piviot
    but tick indicator not indicating strong selling
    i am out of my shorts for the moment

    1. Dunno, Aussie. I use a EMA 10 and so far it’s having trouble getting above it. This last candle showed some promise. Til it gets above it, trend is down. You’re right, lots of selling, takes a while to overcome it.

  4. they just front run the bulls stops
    so it can go higher now if it wants
    of course london germany leading the way but now just closing

          1. Bulls made a stand at the previous low. This is ugly, but so far the bears have not been able to push it below the lowest level of support. Close, but so far no cigar.

          2. im long dia calls and feeling a bit uncomfortable… only down a dime…sounds like u live in jax florida

          3. This is an uncomfortable trade, no question. There are some that hit their level, bounce and never look back. This one doesn’t want to leave home, kinda like “failure to launch.” BTW, I have not yet seen a clear buy signal which should happen along the way. And since that one close above the 10 ema, there has not been another. We are in lunch time now, too, so we’ll have to wait it out.
            Jax, yes, you’re correct

          4. About to encounter some resistance here at 1968. May lose a few points, but we should resume northbound move soon after.

          5. yea i just closed out my position with a nickle gain..looking to reload on pull back

  5. spx cash could go to 1953 S5 Piviot but not indicated atm
    is this a 1 to 4 day counter trend or the end of the universe
    when does earnings offically start with alcoa

  6. Thanks Mike –didnt see that part of Jasons post
    the instos wont push it down hard now until another 2 -3 weeks and the banks and some tech earnings out of way,but after hours volitility should return
    the end of the world will just have to wait –i suppose

    1. You’re welcome, Aussie.
      This reply by the bulls today is less than impressive.
      They need to hold the 3 pm low for them to have any credibility on this move off the bottom. They could put on a show in the last 45 mins, wouldn’t be the first time — this is a dull market, and I know you know what they say about dull markets. later

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