Before the Open (Aug 10)

Good morning. Happy Monday. Hope you had a nice weekend.
The Asian/Pacific markets closed mixed. China rallied almost 5%. Japan and Australia also did well. Malaysia fell 1.7%. India and Indonesia also fell. Europe currently leans to the downside. Greece and Spain are up more than 1%; Sweden and Switzerland are also doing well. Turkey is down more than 1%; London, Belgium and Norway are also weak. Futures here in the States point towards a moderate gap up open for the cash market.
VIDEO: State of the Market
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are mostly down.
We enter this new week with the bulls having their backs somewhat against the wall. The market has been alternating – up, down, up, down – the last four weeks, and with some indexes making lower lows and others close to their lows, the onus is on the bulls to step up and defend their turf. The S&P closed 10 points off its low Friday and is now set to gap up another 8 points this morning. So far it’s on the right track.
But while we’ve gotten many bounces the last few months, internally the market has deteriorated. The AD line, the bullish percent charts, the number of stocks trading above key moving averages – they’ve all been declining. This tells us the participation rate is not very good, that less and less stocks are doing the heavy lifting while more and more stocks drops. The indexes have held up pretty well, but they seem to mask what’s going on beneath the surface.
As long as this remains the case, as long as the internals remain weak, rallies will continue to get sold. And…the longer it continues, the higher the odds we suddenly hit a downside air pocket, and the market legs down hard. Be careful on the long side right now. More after the open.
Stock headlines from barchart.com…
Precision Castparts (PCP +0.04%) surged 17% in pre-market trading on reports that Berkshire Hathaway was in talks to purchase the company for $37.2 billion.
Genesis Healthcare (GEN +4.04%) was upgraded to ‘Outperform’ from ‘Sector Perform’ at RBC Capital.
Transocean (RIG -1.95%) was upgraded to ‘Hold’ from ‘Underperform’ at Jefferies.
AES Corp. (AES +0.32%) reported Q2 adjusted EPS of 25 cents, below consensus of 27 cents.
Intuit (INTU +1.22%) was downgraded to ‘Market Perform’ from ‘Outperform’ at Raymond James.
Westlake Chemical (WLK -3.82%) was downgraded to ‘Sell’ from ‘Neutral’ at Goldman Sachs.
Piper Jaffray maintains an ‘Overweight’ rating on Electronic Arts (EA -0.88%) and raised its price target on the stock to $85 from $79.
Endo International PLC (ENDP +2.51%) reported Q2 EPS of $1.08, higher than consensus of $1.01.
Berkshire Hathaway (BRK.B +0.14%) fell over 1% in European trading after it reported Q2 operating EPS of $2,367, below consensus of $3,038.
JP Morgan Chase reported a 10.2% passive stake in Spark Energy (SPKE -0.97%) .
The New Home Company (NWHM -4.36%) was downgraded to ‘Neutral’ from ‘Overweight’ at JPMorgan Chase.
Lehigh Gas (LDP +0.04%) was downgraded to ‘Perform’ from ‘Outperform’ at Oppenheimer.
Intel reported a 5.0% passive stake in CareDx (CDNA +1.11%).
Sands Capital reported a 10.9% passive stake in LendingClub (LC -0.78%).
Earnings and Economic Numbers from seekingalpha.com…
Today’s Economic Calendar
10:00 Labor market condition index
12:30 PM TD Ameritrade IMX
Notable earnings before today’s open: ACHN, AKBA, ALSK, BDSI, BIOS, CNP, DF, DXPE, ECPG, ENDP, EVEP, HPT, ICON, IPXL, MNKD, MPAA, NAT, NRZ, PDCE, PGEM, POZN, RDNT, RESI, SYY, TPH, WAC
Notable earnings after today’s close: ALIM, AMBC, APEI, BDE, CALL, CARA, CHMI, CLDX, CUI, DTSI, ENV, FF, FNV, FRSH, FTEK, OTCQB:GSAT, GTY, HALO, ICUI, IFF, IMN, KEYW, KHC, KITE, LNCE, LOPE, LYV, MCC, MDR, MM, MODN, MR, MXL, NSPH, NVAX, OMED, OMER, OTC:PFIE, PRAA, RAX, REN, RENT, SCLN, SF, SFXE, SHAK, TDW, TTWO, TUBE, VIPS, XON, XONE, YUME, ZGNX
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers