Before the Open (Jul 23)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly up. Hong Kong, Singapore, Australia and India led the way. Europe is currently mostly up – gains and losses are very small. Greece, France, Germany and Austria lead to the upside, but no market is up more than 0.5%. Futures here in the States point towards an up open for the cash market.

The dollar is flat. Oil is up slightly, so is copper. Gold and silver are up.
The S&P 500 hit a new all-time high yesterday; the Dow isn’t far behind. The Nas is breaking out from a consolidation pattern; the Russell has some catching up to do. Considering the divergence between the big and small caps, the lagging breadth indicators and the low number of quality set ups, it’s a small surprise the large caps have held up so well and are so well-positioned to bust out and run.
The market isn’t out of the woods yet. The indicators have improved, but improvement must continue. Better set ups could be had this week – a step. The small caps have led the last few days – this must continue. The market has taken steps to bust out and run, but I’m not yet convinced it’s going to happen right now. Tensions in the Middle East and Eastern Europe could keep a cap on things.
The #1 ingredient that supports a rally right now ->> nobody thinks it’s possible. Bearishness has grown a bunch lately, so if things calm down in the world, we could get a multi-day short squeeze.
Manage positions wisely. Given the landscape I think it’s best to stay conservative.
Stock headlines from barchart.com…
Of the 13 of the S&P 500 companies that have reported earnings this morning, only two reported below-consensus EPS, i.e., Whirlpool (WHR +2.03%) (2.62 vs consensus of 2.91) and Praxair (PX +0.16%) (1.58 vs 1.59). Notable companies that have reported above-consensus earnings this morning include Dow Chemical (DOW +0.85%) (0.74 vs 0.72), PepsiCo (PEP -0.82%) (1.32 vs 1.23), Delta Airlines (DAL +1.43%) (1.04 vs 1.033), and General Dynamics (GD +0.17%) (1.88 vs 1.77).
Apple (AAPL +0.83%) fell late yesterday after after reporting third quarter results and fourth quarter guidance.
Microsoft (MSFT unch) recovered and rose more than 1% late yesterday after an initial dip on its earnings report. Microsoft’s Q2 EPS of 55 cents was below the consensus of 60 cents due to expenses related to Microsoft’s purchase of Nokia’s mobile business in April.
Broadcom (BRCM +0.31%) (+3%) and Robert Half (RHI +0.73%) (+4%) rallied in after-hours trading yesterday after positive earnings results.
Ballard Power Systems (BLDP +0.24%) rallied near 3% late yesterday after news its received a purchase order from New Flyer Industries.
Xilinx (XLNX -0.37%) fell sharply by nearly 9% late yesterday after reporting earnings.
Deutsche Bank is down more than -2% today after news that the New York Fed in December sent a letter to the bank saying that regulators found that the bank’s U.S. operations suffered from inadequate oversight.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
Notable earnings before today’s open: ABB, APD, APH, BA, BABY, BEAV, BIIB, CHKP, CKSW, CNMD, COR, DAL, DOW, EMC, EVR, FCX, FDML, GD, GRA, HCBK, HERO, JAKK, JNS, KNX, LAD, LSTR, MDCO, MKTX, NOC, NSC, NYCB, OC, OCR, PCH, PEP, PX, R, RES, SEIC, SLGN, SPG, STM, TEL, TMO, TUP, WHR
Notable earnings after today’s close: AF, AHL, AIZ, ALGT, ALSN, ANGI, ANGO, AVB, AWH, BDN, CA, CAKE, CCI, CHE, CLB, CLGX, CLW, CMRE, CRUS, CSGP, CTXS, EFX, EGHT, ETFC, ETH, FB, FFIV, FLS, FR, FTNT, GGG, GILD, HBI, HWAY, IBKC, ILMN, INFN, KALU, LHO, MAC, MKSI, MSA, NSR, NVEC, NXPI, OHI, OII, ORLY, PLCM, QCOM, QTM, RE, RJF, SFG, SGMO, SKX, SLG, SLM, SUSQ, T, TAL, TCBI, TER, TEX, TILE, TMK, TQNT, TRIP, TSCO, TYL, UMPQ, USTR, VAR, WFT
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Jul 23)”

  1. Lest anyone think I’m contradicting the advice Jason has provided, I want to make this disclaimer: I am purely relating to those who want to listen, what the chart tells me. And it says higher. However, further advice Jason has given in the past is don’t get married to a position. If things head south, or if you feel uncomfortable, either hedge or exit. The market is a “game” of odds. The odds — now — say higher, but remember,they’re called “odds,” not “guarantee.” Not trying to preach, just don’t want to give the appearance of saying something which some may interpret as contradictory to Jason’s advice.
    With that out of the way, this is what the chart indicates to me.
    Bulls kept it “up there” yesterday til they ran out of fuel. The pullback might’ve been disheartening if you were in a long and hoping for higher, but “they” brought it down to a level of support which has as its target in the high 1980s, low 1990s. Of course, 2000 will be just a bit higher.
    In other words, nothing here not to like.
    They could easily drop down to 1981-80, or 1976-73 and maintain the bullish uptrend.
    Futures range since 4 pm: -2.25 to +4.50, at 915 am +3.50
    Bonds: bearish.

    1. Wolf wave pattern. uc the touches on the tl’s. all these are drawn with parallel lines. stemming from one lower base line. His theory is similar to Elliott. 5th wave would be at the 200ma and then we go to the 6th wave for a new hod…

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