Before the Open (May 31)

Posted on by Jason Leavitt

Good morning. Happy Tuesday. Hope you had a good weekend.
Yesterday the Asian/Pacific markets closed mostly up, but movement was minimal. Japan rallied more than 1%; Taiwan, New Zealand and Indonesia also did well. Today the markets were mixed. China rallied 3.3%, and Japan and South Korea also did well. Indonesia did poorly. Europe was quiet yesterday. Norway, Turkey and Italy did well. Currently it’s mixed. Greece is up more than 2%; Belgium is also doing well. Norway, Switzerland, Russia and Poland are weak. Futures here in the States point towards an up open for the cash market.
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LB Weekly – the indexes, the breadth indicators, a look at the big picture
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The dollar is flat. Oil is up, copper is down. Gold and silver are down. Bonds are down.
Today is the last day of May. It’s supposed to be a weak month – at least according to the bears who used historical tendencies to argue their case – but thanks to last week’s huge move (biggest move since February), the S&P is currently up 34 points (1.6%) for the month. Overall the range has been on the small side, and allowing for a little wiggle room, most of the action took place within last month’s range.
Fed talk is ramping up. Despite there being many economic reports on the agenda this week, including Friday’s employment numbers, everyone is focused on whether Fed will raise rates at the June meeting, which isn’t until June 15.
Oil continues to do well, but gold and silver are suffering their biggest drops since bottoming earlier this year. This is a key time for the metals. Is the current pullback just a pullback within an uptrend, or is a top in place for now? There are a lot of moving parts, so if you’re in, follow the charts, define your risk and know that you can always get back in at a later date if the metals turn around.
That’s it for now. I said everything I wanted to say in the weekly report published over the weekend.
Stock headlines from barchart.com…
Celator Pharmaceuticals (CPXX +0.17%) soared over 70% in pre-market trading after it agreed to a $1.5 billion takeover offer from Jazz Pharmaceuticals.
Lockheed Martin (LMT -0.60%) was downgraded to ‘Hold’ from ‘Buy’ at Berenberg.
Marathon Oil (MRO -2.05%) was upgraded to ‘Overweight’ from ‘Neutral’ at Piper Jaffray.
Deere & Co. (DE +0.29%) was upgraded to ‘Buy’ from ‘Neutral’ at UBS with a 12-month price target of $94.
Micron (MU +3.01%) was upgraded to ‘Outperform’ from ‘Neutral’ at Robert Baird.
Dril-Quip (DRQ +1.12%) was upgraded to ‘Buy’ from ‘Accumulate’ at KLR Group with a price target of $70.
Signature Bank/New York (SBNY +0.85%) was downgraded to ‘Neutral’ from ‘Overweight’ at Piper Jaffray with a 12-month price target of $146.
TransDigm Group (TDG +0.47%) jumped 4% in after-hours trading after it was announced that it will replace Baxalta in the S&P 500 after the close of trading Thursday, June 2.
Brocade (BRCD +0.23%) rose 3% in after-hours trading after it was announced that it will replace MDC Holdings in the MidCap 400 after the close of trading on Tuesday, May 31.
The FDA approved Zinbryta, made by Biogen (BIIB +0.28%) and Abbvie (ABBV +1.31%), for the treatment of adults with relapsing forms of multiple sclerosis.
Reuters reports that Williams Cos (WMB +3.22%) has informed Energy Transfer Equity ETE that it is open to considering a new offer that would replace the $6 billion portion of the deal with shares in the acquisition vehicle that Energy Transfer will create.
Osiris Therapeutics (OSIR +1.43%) slumped 10% in after-hours trading after it said a criminal probe against the company was started by the U.S. Attorney’s Office for the Southern District of New York.
Today’s Economic Calendar
8:30 Personal Income and Outlays
9:00 S&P Case-Shiller Home Price Index
9:45 Chicago PMI
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:30 Dallas Fed Manufacturing Survey
3:00 Farm Prices
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers

3 thoughts on “Before the Open (May 31)”

  1. Well, a new threat from Yellen. She fears inflation is near. No, its here. I have moderated my views:The portfolio model I am using now is 35% Cash, 35% Bonds, and 30% in Equities bearing dividends as my first move into defense. We need to guess how this ends, but its too soon – we must wait to see if she will push things too far, into a recession. Todays numbers BLS tell us very little except… no definitive information yet and the election, do we wait until November? No, I am defensive now.

  2. the world is cutting rates and doing more QE, not raising rates. usa is not an island, it is part of the world. if the fed were worried about inflation, it would be raising rates at half-point increments, not a quarter point once a year with lip service the rest of the year. in fact, yellen would probably cut that 25 basis points right back if that would not make america look like mexico. but it would, raise it today to cut it next month, then raise it again next year. always look at the magician’s hands, not her lips or eyes.

  3. well technically may was a very bearish month
    there is a large broadening megaphone pattern from 2000 that was compleated and now here we are again
    testing that with another broadening pattern inside the bigger one–they are grossly terminal events
    especially if we dont even reach a new high
    so well done the bears for being bearish and having the fed push it high,with other central banks and pension funds–doing the pushing and of course with few bulls out their to stop the ponsi cracking–usually markets top with to many bulls so maybe more higher to con some more bulls,but if it can drop here
    then very bearish–we should at least be on short alert if not daytrading,which of late has been a bit boring

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