Before the Open (Jul 6)

Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets closed mostly down. Hong Kong fell more than 3%, Japan and South Korea more than 2%, Australia, Indonesia, New Zealand and Taiwan more than 1%. China rallied 2.4%. Europe and Africa are currently mostly down. Egypt is down more than 4%, Italy and Portugal are down more than 3%, Austria and Spain are down more than 2%, Germany, France, Belgium, Amsterdam, Norway, Stockholm, Finland, Sweden and South Africa are down more than 1%. Futures here in the States point towards a big gap down open for the cash market.
Leavitt Brothers video overview
The dollar is up. Oil is down $2.46; copper is down. Gold and silver are flat. Bonds are up.
For the second straight week, we’re getting a big, Greece-induced gap down to start the week. Voters in Greece voted ‘no’ in a referendum asking for more austerity in return for bailout money. Greeks have had enough austerity. Emergency meetings in Europe are now in progress.
Nuclear talks between Iran and six world powers made a lot of progress over the weekend. Should sanctions on Iran be lifted, the country would double its oil exports. This is a big reason crude is down so much this morning.
Aetna (AET) is acquiring Humana (HUM) for about $37B. The list of major health care insurers is now down to 4.
Even without the news from Greece and Iran, my bias was to the downside. The indexes are neutral when going back several months, but the indicators have been weak for two months and there haven’t been many good set ups to play. Quick trades for a buck or two have dominated our trading. Yes there have been a few directional moves, but overall being a singles hitter instead of swinging for the fences has been and will continue to be the way to go. This is not a time to take big chances.
The market has been a big sloppy mess most of this year, and until things clear up in Europe, I don’t see a rally sustaining itself. The path of least resistance is down. There will be rallies (some of them big), but in my eyes, rallies are shortable until that proves to be unwise. More after the open.
Stock headlines from barchart.com…
Celanese (CE +2.39%) was downgraded to ‘Neutral’ from ‘Buy’ at UBS.
Intuitive Surgical (ISRG +0.09%) was downgraded to ‘Underweight’ from ‘Equal Weight’ at Morgan Stanley.
Guess (GES -0.88%) was upgraded to ‘Neutral’ from ‘Underweight’ at Piper Jaffray.
Aegerion (AEGR -1.27%) was downgraded to ‘Sell’ from ‘Neutral’ at Guggenheim.
VMware (VMW +0.40%) was downgraded to ‘Market Perform’ from ‘Outperform’ at FBR Capital.
Bank of America (BAC -1.10%) and Citigroup (C -0.56%) both fell over 1% in pre-market trading as financial stocks fell across the globe following the results of the Greek referendum.
Humana (HUM -2.92%) jumped over 8% in pre-market trading after Aetna agreed to buy the health insurer for about $35 billion,
The Financial Times reported that Royal Bank of Scotland (RBS +0.89%) could potentially face a judgment of nearly $13 billion in a case related to the subprime mortgage crisis.
Pershing Square reported a 13.2% stake in Howard Hughes (HHC -0.81%).
Man Group reported a 5.31% stake in Perfect World (PWRD -0.25%).
Point72 Asset Management reported a 5.1% passive stake in SPX Corp. (SPW -0.65%).
Frigate Ventures reported a 6.8% passive stake in Novogen (NVGN unch).
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
8:30 Gallup US Consumer Spending Measure
9:45 PMI Services Index
10:00 Labor market condition index
10:00 ISM Non-Manufacturing Index
12:30 PM TD Ameritrade IMX
Notable earnings before today’s open: FINL
Notable earnings after today’s close: SHLM
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers