Before the Open (Jul 9)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly down. Australia, Hong Kong and China dropped more than 1%; Indonesia rallied 0.7%. Europe is currently mixed. Belgium is down 2.2%, Greece 1.8%. Prague is up 0.9%, Italy 0.8%. Futures here in the States point towards an up open for the cash market.

The dollar is flat. Oil is down, copper is up. Gold and silver are up.
The combination of the last two days have been the worst back-to-back days since May, and if the week closed here, we’d have the biggest down week since April.
The question is whether this is the beginning of a bigger correction or if it will turn out to be a minor pullback within a strong uptrend – as has been the case going back to the last major low in November 2012.
Nobody knows the answer. There’s a decent argument for both sides, but in my opinion the bulls deserve the benefit of the doubt because the trend has been up for so long. Two down days don’t destroy a strong move.
Given my attitude, this doesn’t mean I blindly hold positions or recklessly enter new ones. I scale back and sit tight for a few days to see how much energy the bears have. If the short term uptrend resumes, I have plenty of dry powder ready to go. If not, there will be plenty of time to go short. More after the open.
Stock headlines from barchart.com…
American Express (AXP -0.87%) was upgraded to ‘Buy’ from ‘Neutral’ at Guggenheim.
Schlumberger (SLB -0.58%) was upgraded to ‘Overweight’ from ‘Neutral’ at HSBC.
Louisiana-Pacific (LPX -2.65%) was downgraded to ‘Sector Perform’ from ‘Outperform’ at RBC Capital.
BNP Paribas (BNPQY -2.04%) was downgraded to ‘Neutral’ from ‘Overweight’ at JPMorgan Chase.
Deutsche Bank (DB -1.78%) was upgraded to ‘Overweight’ from ‘Neutral’ at JPMorgan Chase.
Potash (POT -0.72%) was downgraded to ‘Neutral’ from ‘Overweight’ at JPMorgan Chase.
Marvell (MRVL +0.76%) was downgraded to ‘Underperform’ from ‘Perform’ at Oppenheimer.
Broadcom (BRCM +0.05%) was upgraded to ‘Outperform’ from ‘Perform’ at Oppenheimer.
British Petroleum (BP -0.46%) was downgraded to ‘Hold from ‘Buy at Deutsche Bank.
Davidson Kempner Partners reported a 7.89% passive stake in Jason Industries (JASN -0.19%) .
Healthcare Services (HCSG -0.76%) reported Q2 EPS of 20 cents, weaker than consensus of 22 cents.
Bob Evans (BOBE -0.70%) reported Q4 EPS of 48 cents, better than consensus of 41 cents.
Alcoa (AA +0.75%) rose nearly 2% in pre-market trading after it reported Q2 adjusted EPS of 18 cents, well above consensus of 12 cents.
International Paper (IP -0.83%) announced its board has authorized an additional $1.5 billion share buyback program to supplement the $1.5 billion share repurchase program authorized in September 2013.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM FOMC minutes
Notable earnings before today’s open: MSM
Notable earnings after today’s close: HELE, WDFC
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Jul 9)”

  1. Very simple game plan today. Tues’ low is the level to watch. Bullish above, bearish below. TGT 1994-5.
    Near term levels to watch.
    Expect a retracement down to 1964, even 1962.
    If it bounces from there, all is good. If no bounce, trouble may be brewing.
    There will be notable resistance at 1971 up thru 1975. If 1975 is broken, it would not be unusual for a pullback, then resumption of the climb.
    Futures were quiet all night, but showed a little bullishness in the last hour, up to +3.5.
    At 9 am, they are +2.0

  4. Watch this morning’s low. Around 1965. They did not like the news that tapering ends in Oct. “Preparing to end tapering in Oct” is the headline I have.

      1. right. They need to take out 1970-71 and stay above about 1969. They do a cha cha cha on these things, and the first move was down, so the last move is critical. Looking good so far.

      1. yeah, sorry, didn’t mention that event. Concur. They must’ve been loaded to sell as soon as the word was released. There was what I consider a sell signal at the close of the 1355 5-min candle.
        Near term target is 1974.50

  6. On VIX, here’s a tip I’ve found helpful. I’ve modified the color of the candle to be green (for bullish) when the candle closes lower than the open (all 5 minute candles.) That way I can tell if VIX is telling me it’s bullish or bearish just by color. Takes a while (at least for me) to read VIX especially in the heat of the moment. But yes I agree that it’s targeting lower, thus bullish.

      1. Go to Edit, then Global Chart Config, then to charts, then chart colors. Now, I am not sure if you display other instruments if you can have two separate configs. Meaning if you display DJI and VIX, for example, the parameters might apply to both. You might be able to save one chart in one config, and save the other in a second config. I use multiple brokers for multiple displays so don’t have that issue.
        That help?

    1. that’s possible. They hit my futures target, my conversion to SPX was off by about half a point. Usually the amount of profit taking at the target causes a reversal. Never know whether they run it up into the bell or just let it come on down for the next move. That’s all for me today. later.

Leave a Reply