Before the Open (Jan 4)

Good morning. Happy Monday. Happy New Year. Hope you had a great, long weekend.
The Asian/Pacific markets got hit hard. China dropped almost 7%, Japan more than 3%, and Hong Kong, India, Malaysia, South Korea and Taiwan fell more than 2%. Europe is currently getting hit hard. Germany is down more than 3%; London, France, Austria, Belgium, Netherlands, Sweden, Switzerland, Poland, Finland, Norway, Spain, Italy and Portugal are down more than 2%. Futures here in the States point towards a big gap down open for the cash market.
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The dollar is down. Oil is up, copper is down. Gold and silver are up. Bonds are up.
Aside from the indexes opening the year with a huge gap down, the market is somewhat split as we start the year. The Dow, Nas and S&P are doing okay – not great, not terrible, just okay. They’re consolidating near their highs and haven’t enjoyed any directional moves in since October. The small and mid caps are a different story. They’re lagging and trending down. They don’t need to lead, but they can’t lag too much. When the market is healthy, everything participates, so until these two catch up some, the market’s upside will be limited.
Shorter term indicators improved the last two weeks, but I’m not sure it counts much, given the time of year. Volume has been low, and there hasn’t been much conviction. Gains are gains, but if Wall St. is a big voting booth, the gains can’t entirely be trusted given the lack of “voters.” Longer term indicators, such as the percentage of stocks above their 200-day moving averages and the bullish percent charts, are weakish overall. There is no subtle, beneath-the-surface, hint that strength is brewing.
The market can do whatever it wants in the near term – this is always the case – but overall we need to see lots of improvement if any rally attempt is going to hold.
Stock headlines from barchart.com…
Chesapeake Energy (CHK +2.27%) and Ultra Petroleum (UPL +2.46%) were both downgraded to ‘Underperform’ from “Market Perform’ at Raymond James.
GameStop (GME -1.54%) was downgraded to ‘Neutral’ from ‘Buy’ at Sterne Agee CRT.
Check Point Software Technologies Ltd. (CHKP -1.19%) was downgraded to ‘Market Perform’ from ‘Outperform’ at Wells Fargo Securities.
Intuitive Surgical (ISRG -1.15%) was raised to ‘Overweight’ at Morgan Stanley.
Shire Plc (SHPG -1.93%) fell nearly 3% in pre-market trading after it said it is in advanced talks to acquire Baxalta Inc for about $32 billion in cash and stock.
Tesla Motors (TSLA +0.81%) said it delivered 50,580 vehicles for the year, within the range it projected in November of 50,000 to 52,000 vehicles.
Public Storage (PSA -1.10%) was downgraded to ‘Neutral’ from ‘Buy’ at Goldman Sachs.
Nike (NKE -1.19%) Chairman Philip Knight resigned from one of his swoosh Class X Board seats and appointed Travis Knight to fill the vacancy.
Nord Anglia Education (NORD +1.10%) revised its Q4 adjusted EPS to a loss of -25 cents, a wider loss than the -22 cents that was reported on Nov 16, citing an “onerous lease provision” on a Chicago school.
Pershing Square reported that it reduced its stake in Valeant Pharmaceuticals (VRX -0.66%) to 8.5% from 9.9%.
CorEnegy Infrastructure (CORR -1.20%) announced a $10 million share repurchase program and an extension of its Pinedale Credit Facility through March of 2016.
Earnings and Economic Numbers from seekingalpha.com…
Today’s Economic Calendar
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
12:30 PM TD Ameritrade IMX
2:00 PM Gallup US Consumer Spending Measure
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers