Before the Open (Dec 21)

Good morning. Happy Monday. Hope you had a great weekend.
The Asian/Pacific markets closed mostly up. China moved up 1.4%; India and Indonesia also did well. Europe currently leans to the upside. Turkey is up more than 1%; London, Germany and Sweden are also doing well. Spain is down more than 2%; Belgium is also weak. Futures in the States point towards a relatively big gap up open for the cash market.
The dollar is up a little. Oil is down, copper is up. Gold and silver are up. Bonds are down.
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S&P Select Week in Review
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The market ended last week with two big down days, but now we enter what is historically the best back-to-back weeks of the year.
Historical tendencies are the most prominent “thing” in the bulls’ camp right now. 1) This time of year is typically strong. 2) Years that end in a 5 (2005, 1995, etc) have closed up forever. This year is down 2.59% so far, so a rally is needed to satisfy this tendency. 3) December in general is typically strong. In fact we haven’t had back-to-back down Decembers since the early 80’s. To avoid this this year, a 3.6% rally is needed the next two weeks.
But other than historical tendencies, the market doesn’t look great right here.
The internals have been weak for a while…the lack of participation has been obvious…weak oil…weak junk bonds…lagging small caps…leaders starting to falter.
I’m not a “checklist trader.” The biggest issue is the weak internals. You simply can’t have less and less stocks participate and expect the indexes to continue up. An end-of-year rally that is not accompanied by a significant improvement in the internals will lead the market coming back down…maybe pretty hard.
If the market moves up the next two weeks, don’t get lured into the hype. There’s trouble brewing under the hood. More after the open.
Stock headlines from barchart.com…
Apple (AAPL -2.71%) is up 1.6% in pre-market trading after it settled a patent dispute with Ericsson AB and agreed to pay Ericsson royalties as part of a 7-year licensing agreement.
Disney (DIS -3.83%) gained nearly 2% in pre-market trading after the company said its “Star Wars: The Force Awakens” movie had topped ticket sales of $100 million on Friday alone, the first time a movie had surpassed $100 million in a single day, and that weekened ticket sales in the U.S. and Canada were a record $238 million.
General Dynamics (GD -1.05%) was upgraded to ‘Buy’ from ‘Hold’ at Drexel Hamilton LLC with a 12-month price target of $153.
Ross Stores (ROST -1.69%) were upgraded to ‘Outperform’ from ‘Market Perform’ at Cowen with a 12-month price target of $63.
The U.S. Department of Defense awarded Ratheon (RTN -1.66%) a $2.35 billion award modification to deliver SM-3 Block IB missiles and related support and recertification.
Merck (MRK -1.94%) said that its Keytruda drug had won expanded FDA approval for treatment of patients with unresectable or metastatic melanoma.
Century Aluminum (CENX +7.91%) rose over 2% in after-hours trading after saying it will keep its Goose Creek plant operating at half capacity while the South Carolina legislature pursues a “long-term solution” to access market power for all of its power supply.
Syngenta (SYT +0.93%) climbed over 2% in after-hours trading after China National Chemical improved its offer to purchase the company.
40 North Management said it raised its stake in Mattress Firm (MFRM +1.36%) to 8.3% from 6.9%.
Sunstone Hotel Investors (SHO -2.51%) rose nearly 2% in after-hours trading after it sold its leasehold interest in the 468-room Doubletree Guest Suites in Times Square for $540 million.
Earnings and Economic Numbers from seekingalpha.com…
Today’s Economic Calendar
8:30 Chicago Fed National Activity Index
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers