Before the Open (May 18)

Good morning. Happy Wednesday.
The Asian/Pacific markets closed with a lean to the downside. Hong Kong and China dropped more than 1%; Australia and South Korea were also weak. Europe currently leans to the downside. Hungary is down more than 1%; London, Austria, the Netherlands, Denmark and Belgium are also weak. Norway and Greece are doing well. Futures here in the States point towards a down open for the cash market.
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I wrote an article for Top Shelf Traders emagazine. You can check it out here. I consider it very important. It’s at the heart of what I do.
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The dollar is up. Oil is flat, copper is down. Gold and silver are down. Bonds are down.
The bulls have their backs against the wall again. Failure to rally much off support this week is a definite warning. I was hoping for a bounce that would shed some light on the internal strength/weakness of the market, but all of Monday’s gains were given back yesterday.
To add to the growing bearish tone, George Soros has reiterated his bearish stance…Stanley Drunkenmiller has joined the bearish parade…and now Goldman Sachs has downgraded its equity outlook to “neutral” over the next 12 months saying “Until we see sustained signals of growth recovery, we do not feel comfortable taking equity risk, particularly as valuations are near peak levels.” This is slightly reminiscent of their March 2000 call when they downgraded their equity exposure from 70% to 65% (or maybe it was from 65% to 60%), which essentially marked the market top. They have also upgraded commodities to “neutral” on a 3-month basis. Interesting considering commodities have been in huge uptrends. They’re a little late, don’t ya think?
Being neutral over the next 12 months makes sense to me. I actually think the market will be flat for much longer than that (I wouldn’t be surprised if it traded in a huge range for many years). But even if the market is unchanged a year from now, there could be 10-20% swings along the way. There will be many opportunities to track the flow of money around the market and make money, even if the indexes don’t do much.
Key time right now. The bulls need to hold tight, or the floor may be pulled out. More after the open.
Stock headlines from barchart.com…
Scripps Networks Interactive (SNI +0.36%) was downgraded to ‘Sell’ from ‘Neutral’ at Citigroup with a price target of $62.
Lowe’s (LOW -1.21%) rose 3% in pre-market trading after it reported Q1 adjusted EPS of 87 cents, higher than consensus of 85 cents.
Tesla (TSLA -1.74%) gained 3% in pre-market trading after it was upgraded to ‘Buy’ from ‘Neutral’ at Goldman Sachs.
Host Hotels & Resorts (HST -0.90%) was upgraded to ‘Market Perform’ from ‘Underperform’ at Raymond James.
The Children’s Place (PLCE +4.13%) was upgraded to ‘Buy’ from ‘Neutral’ at Goldman Sachs with a price target of $74.
Brocade Communications Systems (BRCD +0.25%) was rated a new ‘Buy’ at Bank of America Merrill Lynch with a price target of $10.
Valeant Pharmaceuticals (VRX +7.50%) said it is exploring the sale of some of its cosmetic and pharmaceutical assets to reduce some of its debt.
Acxion (ACXM -1.93%) dropped over 6% in after-hours trading after it lowered guidance on fiscal 2017 adjusted EPS to 55 cents to slightly higher, below consensus of 65 cents.
Dynagas LNG Partners (DLNG +0.38%) reported Q1 adjusted EPS/unit 48 cents, higher than consensus of 45 cents.
Allegheny Technologies (ATI unch) fell over 1% in after-hours trading after it announced plans for a convertible offering of senior notes.
Vipshop Holdings Ltd. (VIPS -1.05%) slumped nearly 10% in after-hours trading after it said its sees Q2 revenue of 12.3 billion yuan-12.8 billion yuan, below consensus of 12.81 billion yuan.
Andersons Inc. (ANDE -2.22%) surged nearly 20% in after-hours trading after HC2 Holdings offered to acquire the company for $37 a share, well above Tuesday’s closing price of $25.94.
Tuesday’s Key Earnings
Home Depot (NYSE:HD) -2.5% despite beating expectations.
TJX Companies (NYSE:TJX) +0.5% after defying a retail slump.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:00 Atlanta Fed’s Business Inflation Expectations
11:00 EIA Petroleum Inventories
2:00 PM FOMC minutes
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers