Before the Open (Dec 16)

Good morning. Happy Tuesday.
The Asian/Pacific markets closed mostly down. Singapore and Japan dropped more than 2%; India, Indonesia and Malaysia dropped more than 1%. China rallied 2.3%. Europe is currently mostly down. Spain is down more than 2%; Italy, Austria, Amsterdam, Norway, Switzerland, Prague, Stockholm and France are down more than 1%. Russia is up almost 2%. Futures here in the States point towards a moderate gap down for the cash market, but this doesn’t tell the whole story. S&P futures dropped from 1994 to 1961.5 and have now rallied back to 1977 – massive overnight movement.

VIDEO: The Indicators Which Helped Me Pick a Short Term Top
The dollar is down. Oil is getting hit hard again; copper is down. Gold and silver are up.
As stated above, there’s been a huge amount of movement in the futures market overnight…actually just the last three hours. The overnight session is typically on the quieter side – maybe the S&P moves 10 points. Not today.
The cause, or at least the main cause, is the desperate measures Russia is taking to stop the slide in its currency. Their central bank raised its key interest rate from 10.5% to 17% in hopes of halting its inflationary slide. The Russian market plunged almost 100 points from 1415 to 1320 but has since rallied up 1460 – crazy movement that is only possible when a country’s currency is unstable. Remember Argentina when its currency was be devalued? Here’s a chart of the country going back two years. That looks like an incredible run – quadrupling from 3000 to 12000 – but actually it was entirely due to its currency getting crushed.

Crude oil is down 2.15 and is printing a 53 handle. Including today oil has dropped 14 of 16 days and has been cut in half since topping in June. It’s been a bottomless pit.
My bias remains to the downside. Enough damage has been done for me to want a complete washout before attempting to rally again. I don’t like reversals from no-man’s land. I’d prefer lots of pain to signal capitulation. Then the market can stabilize and move up.
Don’t get lazy. More after the open.
Stock headlines from barchart.com…
Microsoft (MSFT -0.60%) was downgraded to ‘Underperform’ from ‘Neutral’ at BofA/Merrill Lynch.
Hess Corp. (HES -1.62%) and EOG Resources (EOG -1.19%) were both downgraded to ‘Equal Weight’ from ‘Overweight’ at Morgan Stanley.
According to The New York Times, the Royal Bank of Scotland (RBS -2.75%) and Lloyds (LYG -1.28%) failed a stress test performed by the Bank of England.
Dollar Tree (DLTR +0.68%) was downgraded to ‘Hold’ from ‘Buy’ at Deutsche Bank.
Macerich (MAC -0.37%) was downgraded to ‘Neutral’ from ‘Buy’ at Citigroup.
Autodesk (ADSK -1.14%) was downgraded to ‘Underperform’ from ‘Neutral’ at BofA/Merrill Lynch.
Bloomberg reported that Olam (OLMIY -1.98%) will acquire Archer Daniel’s (ADM -0.04%) cocoa business for $1.3 billion.
Boeing (BA +1.08%) climbed 2.7% in pre-market trading after it raised its dividend 25% and authorized a $12 billion share repurchase plan.
Goldman Sachs (GS -1.74%) was initiated with a ‘Buy’ at Guggenheim with a price target of $215.
Bank of America (BAC -1.63%) was initiated with a ‘Buy’ at Guggenheim with a price target of $20.
VeriFone (PAY +0.15%) reported Q4 EPS of 44 cents, higher than consensus of 41 cents.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
FOMC meeting begins
7:45 ICSC Retail Store Sales
8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:45 PMI Manufacturing Index Flash
Notable earnings before today’s open: DRI, FDS, NAV
Notable earnings after today’s close: HEI
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers