T3’s Take 3: Bad News Banks Beat Merger Mania!

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1) M&A Fever

Today was a good day for Wall Street dealmakers as 2 sizeable deals were announced, with another Twitter (TWTR) takeover rumor serving as the icing on top.

Privately-held outdoors retailer Bass Prop Shops is buying Cabela’s (CAB) for $5.5 billion. The combined company will have nearly 200 stores in the United States.

Legendary bond investor Bill Gross also has a new employer, as his company Janus Capital (JNS) will be acquired by UK-based asset manager Henderson Group Plc.

Meanwhile, Bloomberg reported that Google (GOOGL) may be kicking the tires on Twitter (TWTR) regarding a possible link-up.

In recent weeks, Twitter shares have skyrocketed on reports that it could be acquired by companies including Salesforce.com (CRM), Microsoft (MSFT), and even Disney (DIS).

Twitter shares rose 4.0% to $23.97 today.

2) US Stocks Pull Back

The S&P 500 pulled back -0.3% as the banking industry came under fire again.

European banks fell today after Deutsche Bank (DB) failed to announced a smaller settlement with the Department of Justice, which handed the bank a $14 billion tab over its mortgage backed securities practices.

Well Fargo (WFC) continued its downtrend on a pile of negative news, including a loss of business with the state of Illinois. Democratic Presidential candidate Hillary Clinton also attacked the bank in a speech in Toledo, Ohio.

Massachusetts Secretary of the Commonwealth William Galvin accused a Morgan Stanley (MS) unit of “dishonest and unethical conduct” in in state dealings.

The S&P Financial ETF (XLF) fell -0.5% today.

Gold miners, utilities, and real estate stocks all fell on stronger-than-expected US economic data, which pushed up the dollar and interest rates.

The Nasdaq slightly outperformed today as select names like Netflix (NFLX) and Tesla (TSLA) staged strong rallies.

3) Rule of 4 Sell Signal?

This afternoon, my good friend Jeff Cooper once again keyed on the widely-watched 2148 level in the SPX.

Here’s what he had to say:

The Daily Swing Chart has turned right back down as the SPX trades below Friday's low this morning.

There is a 3 point rising trend line on the hourlies that now ties to around the key 2148 level.

So if this is breached, it will trigger an hourly Rule of 4 sell from September’s pennant to kick off October, a potentially poor harbinger for the what is often a wicked month.

Tuesday’s Trading Calendar

US Economics (Time Zone: EDT)

08:05 Fed's Lacker Speaks at West Virginia Economic Outlook Meeting
09:45 ISM New York (Sep): prior 47.5
19:50 Fed's Evans Speaks on Economy and Policy in Auckland, NZ

Global Economics

03:00 EUR Spanish Unemployment Change
04:30 GBP Construction PMI
20:30 AUD Retail Sales m/m

Earnings

Before Open:

Darden Restaurants Inc (DRI)

After Close:

None of significance