Before the Open (Aug 6)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly down. Japan, India and Indonesia dropped about 1%. Europe is currently suffering relatively big, across-the-board losses. Greece is down 3.3%; Italy is down 2.5%; France, Germany, London, Spain, Austria, Amsterdam, Norway, Sweden, Switzerland and Russia are down more than 1%. Futures here in the States point towards a moderate gap down open for the cash market.

The dollar is up. Oil is up, copper down. Gold and silver are up.
The market is not in great shape right now. Goods news doesn’t help stocks; bad news is a reason to sell with force. There has definitely been a change in character lately relative to the past where the market was able to quickly absorb or ignore bad news.
The biggest issue now is the potential for a Russian invasion of Ukraine. Russia is a major military force, and Putin, who longs for the glory days, cannot be trusted in any situation. What’s going on in Middle East between Israel and Palestine is minor compared to what could erupt between Russia and Ukraine.
Sprint is abandoning its bid to acquire T-Mobile USA. Sprint is down 13% is premarket trading.
Fox is abandoning its bid to acquire Time Warner. TWX is down 12%.
This is more evidence of a deteriorating market. Big acquisitions are hard; they take a lot of time and money and are a massive amount of work…but are viewed worth it in the long run. If companies are abandoning acquisition plans, it tells me 1) the effort isn’t worth it and 2) CEOs believe prices are heading south and therefore lower prices can be gotten in the future.
The quality and quantity of good set ups has been low for about a month. I’ve documented this…that even if the trend were strong and obvious and we didn’t have the big divergence between the big and small caps, there wasn’t much to do anyways. Swinging for singles – as opposed to swinging for the fences – has been our MO for a while. More after the open.
Stock headlines from barchart.com…
Sprint (S -1.22%) slumped 17% in pre-market trading after a person with knowledge of the matter said the company ended talks to acquire T-Mobile.
Time Warner (TWX -0.40%) dropped 12% in pre-market trading after 21st Century Fox withdrew its takeover bid for the company.
DISH (DISH -0.45%) reported Q2 EPS of 46 cents, below consensus of 51 cents
Cablevision (CVC -7.04%) was upgraded to ‘Neutral’ from ‘Sell’ at Citigroup.
Tesla (TSLA -0.01%) was initiated with an ‘Outperform’ at Pacific Crest with a price target of $316.
Peugeot (PEUGY +1.45%) was upgraded to ‘Neutral’ from ‘Sell’ at Citigroup.
Credit Agricole (CRARY +0.87%) was upgraded to ‘Buy’ from ‘Hold’ at Deutsche Bank.
Cerner (CERN -1.45%) will acquire Siemens Health Services (SIEGY -1.38%) for $1.3 billion in cash.
Disney (DIS -0.56%) rose over 1% in after-hours trading after it reported Q3 EPS of $1.28, above consensus of $1.17.
Activision Blizzard (ATVI -1.11%) rose over 3% in after-hours trading after it reported Q2 EPS of 6 cents, three time more than consensus of 2 cents.
Groupon (GRPN +0.71%) sank 17% in after-hours trading after it reported Q2 EPS of 1 cent, right on consensus, but then lowered guidance on Q3 EPS to zero to 2 cents, below consensus of 3 cents.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:00 MBA Mortgage Applications
8:30 Gallup U.S. Job Creation Index
8:30 International Trade
8:30 Treasury Refunding Quarterly Announcement
10:30 EIA Petroleum Inventories
Notable earnings before today’s open: ANR, AOL, APO, ARIA, AVA, AVT, BRKR, CEQP, CHK, CLH, CMLS, CNP, CONE, CSTE, CTSH, DBD, DISH, DNR, DVN, DWSN, EE, ELOS, GEO, GOV, GWPH, HFC, HNT, INXN, IPXL, ITC, KELYA, LINC, LIOX, MDLZ, MEMP, MVIS, NAVB, NUS, PERI, PH, PKD, POWR, RDC, RL, ROC, SBGI, SE, SEP, SF, SJI, SKYW, STWD, TAP, THI, TRGT, TWX, VC, VIAB, VITC, VOYA, WD, WIX, WPX, ZINC
Notable earnings after today’s close: ACAS, AGU, ALDW, ANAD, ANDE, AR, ATML, ATO, AWK, BIOS, BIRT, BKD, BREW, BWC, CDE, CDXS, CF, CLDX, CNVR, CODI, COUP, CPA, CPE, CRL, CSII, CSOD, CTL, CXO, CXW, DCTH, DEPO, DK, DNB, DXCM, DYN, ECOL, EFC, ELON, ENS, ENV, ERII, ESS, ETE, ETP, EVC, EXAR, FLTX, FNV, FOXA, FTK, GEOS, GMCR, GPOR, GTY, HI, HIL, IL, INN, INWK, IO, ITMN, IXYS, JACK, KEG, KND, KW, LGP, LHCG, LNT, MBI, MCP, MG, MHLD, MNTX, MRIN, MTDR, MUSA, MWE, NBIX, NLY, NPSP, NRP, NVAX, NVTL, OILT, OSUR, PAA, PACD, PKT, PMT, PPO, PRI, PRU, PRXL, PTLA, QEP, RAIL, REG, RGP, RIG, RJET, RLOC, RNDY, RXN, SAAS, SAPE, SD, SGI, SLF, SN, SSNI, SSRI, SWM, SXL, SYMC, TCAP, TEG, TEP, THOR, THRX, TNGO, TRMR, TROX, TWO, TXTR, UHAL, UIL, WGL, WR, WTI, XNPT, YY, ZU
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Aug 6)”

  1. Jason’s analysis is spot on. If you know how to hedge, you’re probably already hedged. If you don’t, now would be an ideal time to learn a way to do so.
    Futures attempted to climb above the resistance I posted in the afternoon “resistance starting about 1921-2 SPX for about 5-6 points.” Close, but no cigar. From the overnight high which was inside of that resistance layer, they went straight down to record the night’s low at -10.
    That created new resistance at SPX equivalent of 1916 to 1919.
    There are targets at 1906 and 1905.
    It’s possible they could attempt to reach as high as yesterday’s close at SPX 1920, but I’d be wary of interpreting that as bullish until we see some higher resistance taken out. Remember, bulls couldn’t take out resistance at 1940-45, and thus we’re still under the influence of that layer.
    At 855, futures are -6.75. Bonds are solidly bearish.

      1. Just before 10 am, you saw the pullback to 1916.5 which held. The high of the morning equated to the overnight high and also the resistance I cited in my last post y’dy aft.
        If we get much above 1925 we may get a short squeeze going.
        Summary: bulls came to play today

        1. Now that we’re in the pullback, watch the low at 955, spx 1916.5. If they bounce it at or above there, you’ve got a short term bullish signal. If that level is busted, either be short or be out.

          3. Jim, the equivalent low for ES is 1911.25 at 955 Eastern. There is a delta between ES and SPX of about 5 points.

          4. i dont understand… my es sept contract 5min chart 930am low is 1905.25 and the 10am high is 1916..should i be looking at something different? thx jims

          5. I concur with the 930 lo and 10 am high you cite.
            What I said is watch the low at 955. (ES is 11.25, SPX is 16.45)
            With me?

          7. Fantastic.
            That bounce moments agowas exactly where it needed to (about two ticks higher than the 955 lo.) Now needs to keep moving up, or else.

  2. i have 12 different equity futures markets open on big monitors t.v screens on 5 and 2 minute charts 24 hours a day plus euro and usd etc and can tell you the usa markets are really insignificant to the international flow of money
    all move in tandum and effect each other, some get spirts on that effects the other
    atm its a euro story a falling euro is risk off for the carry trade -a target of 132 should be a bottom
    london is the biggest financial hub in the world far supassing usa when the buying comes in,it will come in via london
    usa markets really only trade for 4 hours a day from high noon till 4 pm
    this is when the fx money markets get turned over to usd and europe closes
    whilst as a international bear i would like the equity markets to go higher
    i have no bias as a daytrading international scalper/snipper

    1. ok, let me get this straight…when the euro supports the 132 level then money should buy the us equities and create a short squeeze up to the spx 1970 area.

      1. OR maybe just before 1.32
        carry trade bounced it at 10.am and again at high noon wall st time from 13345 up to 1.3390
        carry trade can be usa instos funding in euros to buy usa stocks expecting a bounce in euro or it can be international money
        risk on euro up -risk of euro down

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