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The overall look this morning isn’t very beneficial to the bull camp, as the Chinese performed another indirect tightening type maneuver overnight, German ZEW readings were a little disappointing and JAL finally declared bankruptcy. One could also note a rather HOT annual inflation reading from the UK overnight and residual weakness in European banks and financial sector stocks. On a positive tilt, the trade might be capable of garnering some support from IBM earnings after the close today, but only if the Citigroup earnings ahead of the opening today are favorable. Other developments that might have stirred the bull camp but didn’t was news that Kraft boosted its bid for Cadbury overnight. Weakness in oil shares is also contributing some downward pressure in energy related shares and therefore it would appear that a very weak downward bias is in place this morning. We don’t see much in the way of anxiety toward the recovery question, but we do get the feeling that the market could wander lower on the charts, unless Citigroup earnings are positive and the NAHB Index around mid session provides the market something positive to embrace. Overall, our feeling is that equity prices are still being seen as expensive in the face of a recovery view that has been downgraded somewhat.
S&P 500: A seven month up trend channel support line in the March S&P is seen down at 1127.50 today and that level is also a close key level from last week’s lows. On the other hand, with the January 12th Commitment of Traders with Options report for S&P 500 Stock Index showing the Non-commercial position to be net short 1,430 contracts, with the Non-reportable position net long 49,654 contracts, that made the “combined” spec and fund position net long 48,224 contracts as of early last week. Therefore, we can’t argue with some more shallow declines ahead, as the macro economic outlook just isn’t favorable enough to throw off the liquidation tilt and in turn shift the bias back to the upside.
DOW: A little more Chinese tightening overnight combined with news of a possible death toll in excess of 200,000 in Haiti looks to leave the Dow in a vulnerable position. As suggested already, we get the sense that the market is a little expensive in the face of somewhat suspect macro economic growth patterns. Naturally the Citigroup earnings will set a large portion of the tone from the trade early this morning but unless those earnings are surprisingly strong, we don’t get the sense that the early earnings news will provide a sustained shift up in sentiment. However, with the January 12th Commitment of Traders with Options report for Dow Jones Index $5 only showing a “combined” spec and fund position that was net long 17,763 contracts as of early last week, the market is probably only marginally net long after the slide last week. However, a 7 month old uptrend channel support line is seen at 10,546 today and the failure to hold that level early today might result in a slide down to even numbers of 10,500.
NASDAQ: The Nasdaq comes in the action marginally above last week’s muted attempt to bounce and in what seems to be a corrective mode. With the January 12th Commitment of Traders with Options report for Nasdaq Mini showing the Non-commercial position to be net long 19,854 contracts, with the Non-reportable position net long 12,707 contracts, that made the “combined” spec and fund position net long 32,561 contracts as of early last week. Therefore, the Nasdaq was a bit overbought and it probably remains vulnerable to more classic type selling today. However, we suspect that the IBM earnings could contribute some underpin to the Nasdaq and the tech sector after the close today. Unfortunately up trend channel support in the March contract doesn’t come in until 1828, but a closer in support and pivot point is seen at 1861.
TODAY’S MARKET IDEAS: A minimal downward bias remains in place, with little in the way of anxiety present in the marketplace early this morning. We would explain the market as disappointed instead of concerned with the economic track.
Stock Market Commentary – 2010.01.19
by Dave Hightower on January 19, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
The overall look this morning isn’t very beneficial to the bull camp, as the Chinese performed another indirect tightening type maneuver overnight, German ZEW readings were a little disappointing and JAL finally declared bankruptcy. One could also note a rather HOT annual inflation reading from the UK overnight and residual weakness in European banks and financial sector stocks. On a positive tilt, the trade might be capable of garnering some support from IBM earnings after the close today, but only if the Citigroup earnings ahead of the opening today are favorable. Other developments that might have stirred the bull camp but didn’t was news that Kraft boosted its bid for Cadbury overnight. Weakness in oil shares is also contributing some downward pressure in energy related shares and therefore it would appear that a very weak downward bias is in place this morning. We don’t see much in the way of anxiety toward the recovery question, but we do get the feeling that the market could wander lower on the charts, unless Citigroup earnings are positive and the NAHB Index around mid session provides the market something positive to embrace. Overall, our feeling is that equity prices are still being seen as expensive in the face of a recovery view that has been downgraded somewhat.
S&P 500: A seven month up trend channel support line in the March S&P is seen down at 1127.50 today and that level is also a close key level from last week’s lows. On the other hand, with the January 12th Commitment of Traders with Options report for S&P 500 Stock Index showing the Non-commercial position to be net short 1,430 contracts, with the Non-reportable position net long 49,654 contracts, that made the “combined” spec and fund position net long 48,224 contracts as of early last week. Therefore, we can’t argue with some more shallow declines ahead, as the macro economic outlook just isn’t favorable enough to throw off the liquidation tilt and in turn shift the bias back to the upside.
DOW: A little more Chinese tightening overnight combined with news of a possible death toll in excess of 200,000 in Haiti looks to leave the Dow in a vulnerable position. As suggested already, we get the sense that the market is a little expensive in the face of somewhat suspect macro economic growth patterns. Naturally the Citigroup earnings will set a large portion of the tone from the trade early this morning but unless those earnings are surprisingly strong, we don’t get the sense that the early earnings news will provide a sustained shift up in sentiment. However, with the January 12th Commitment of Traders with Options report for Dow Jones Index $5 only showing a “combined” spec and fund position that was net long 17,763 contracts as of early last week, the market is probably only marginally net long after the slide last week. However, a 7 month old uptrend channel support line is seen at 10,546 today and the failure to hold that level early today might result in a slide down to even numbers of 10,500.
NASDAQ: The Nasdaq comes in the action marginally above last week’s muted attempt to bounce and in what seems to be a corrective mode. With the January 12th Commitment of Traders with Options report for Nasdaq Mini showing the Non-commercial position to be net long 19,854 contracts, with the Non-reportable position net long 12,707 contracts, that made the “combined” spec and fund position net long 32,561 contracts as of early last week. Therefore, the Nasdaq was a bit overbought and it probably remains vulnerable to more classic type selling today. However, we suspect that the IBM earnings could contribute some underpin to the Nasdaq and the tech sector after the close today. Unfortunately up trend channel support in the March contract doesn’t come in until 1828, but a closer in support and pivot point is seen at 1861.
TODAY’S MARKET IDEAS: A minimal downward bias remains in place, with little in the way of anxiety present in the marketplace early this morning. We would explain the market as disappointed instead of concerned with the economic track.
Tags: DOW, Financials, NASDAQ, S&P 500, Stocks
About Dave Hightower