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While the markets are showing some rebound action in the early going, we don’t get the sense that the market has pivoted off a deck clearing fundamental development. In other words, the recovery effort this morning seems to be mostly a technical anomaly, with the trade still generally concerned about the EU debt situation. About the most positive development, is that severe weather in Washington has effectively eliminated the flow of political uncertainty temporarily but even that lucky break isn’t expected to last for long, especially with Bernanke scheduled for a grilling on Wednesday. With the US economic report slate today somewhat inactive, with only a Wholesale trade release, one shouldn’t expect a sudden improvement in overall psychology. We do think that the equity markets might derive a small measure of support from the first leg of US Treasury auctions later today, as high demand for US 3 Year notes might send a message that rates are likely to stay low for the foreseeable future. In fact, with a Fed member yesterday suggesting that the Fed would wait until the 2nd half of the year to begin asset sales and also suggesting that they would wait until after the asset sales begin before hiking rates, the market should be confident that rates for now are destined to remain low. In short, the market can periodically bounce, but we don’t get a sense that the bear tilt has been discarded yet.
S&P 500: Until the March S&P manages to regain and hold above 1070.40 we will assume that the trend is pointing down. As suggested already the trade continues to fret over the prospect of EU debt problems under the surface and the trade also seems to think that the pace of the US recovery remains in question. Perhaps the market will get a temporary lift from the US Treasury auction or perhaps the market will get a fleeting lift off the promise of another US jobs bill, but we are not sure that the market will find the news to fully throw off the negative bias that has dominated the trade since the middle of January.
DOW: While the March Mini Dow is showing signs of returning to the 10,000 level in the action this morning, we continue to see more risk to longs than potential reward. As suggested already, we wouldn’t be surprised to see a bit of a bounce into mid session today, in the wake of the US Treasury auction, but we ultimately think that prices are destined to work even lower. While some bulls might be banking on a key low in the face of a Senate jobs bill announcement, the market wasn’t upbeat toward that prospect when it was initially announced. While traders and investors aren’t overly negative toward prospects, we aren’t sure that a single economic report or some statement from Washington is capable of suddenly shifting the trend securely back to the upside. We would be a seller of rallies in the March Mini Dow to 10,000 perhaps even after a knee jerk reaction to Coke earnings today.
NASDAQ: Like the rest of the marketplace, the March Nasdaq has forged a recovery attempt in the early action today and we would not be surprised to see an additional lift provided by corporate earnings news, but we just don’t think that corporate earnings or a third tier US economic reading is capable of taking the negative tilt completely out of the equity markets. However, those looking to get short this market, might wait until after mid day to step into short side positions. In fact, one should probably wait for a bounce back above 1756 in the March Nasdaq to re-enter a short side trade.
TODAY’S MARKET IDEAS: The bull camp might be able to control for the first half of the trading session but we fear that the afternoon will bring on the sellers again.
Stocks Market Commentary – 2010.01.09
by Dave Hightower on February 9, 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!
While the markets are showing some rebound action in the early going, we don’t get the sense that the market has pivoted off a deck clearing fundamental development. In other words, the recovery effort this morning seems to be mostly a technical anomaly, with the trade still generally concerned about the EU debt situation. About the most positive development, is that severe weather in Washington has effectively eliminated the flow of political uncertainty temporarily but even that lucky break isn’t expected to last for long, especially with Bernanke scheduled for a grilling on Wednesday. With the US economic report slate today somewhat inactive, with only a Wholesale trade release, one shouldn’t expect a sudden improvement in overall psychology. We do think that the equity markets might derive a small measure of support from the first leg of US Treasury auctions later today, as high demand for US 3 Year notes might send a message that rates are likely to stay low for the foreseeable future. In fact, with a Fed member yesterday suggesting that the Fed would wait until the 2nd half of the year to begin asset sales and also suggesting that they would wait until after the asset sales begin before hiking rates, the market should be confident that rates for now are destined to remain low. In short, the market can periodically bounce, but we don’t get a sense that the bear tilt has been discarded yet.
S&P 500: Until the March S&P manages to regain and hold above 1070.40 we will assume that the trend is pointing down. As suggested already the trade continues to fret over the prospect of EU debt problems under the surface and the trade also seems to think that the pace of the US recovery remains in question. Perhaps the market will get a temporary lift from the US Treasury auction or perhaps the market will get a fleeting lift off the promise of another US jobs bill, but we are not sure that the market will find the news to fully throw off the negative bias that has dominated the trade since the middle of January.
DOW: While the March Mini Dow is showing signs of returning to the 10,000 level in the action this morning, we continue to see more risk to longs than potential reward. As suggested already, we wouldn’t be surprised to see a bit of a bounce into mid session today, in the wake of the US Treasury auction, but we ultimately think that prices are destined to work even lower. While some bulls might be banking on a key low in the face of a Senate jobs bill announcement, the market wasn’t upbeat toward that prospect when it was initially announced. While traders and investors aren’t overly negative toward prospects, we aren’t sure that a single economic report or some statement from Washington is capable of suddenly shifting the trend securely back to the upside. We would be a seller of rallies in the March Mini Dow to 10,000 perhaps even after a knee jerk reaction to Coke earnings today.
NASDAQ: Like the rest of the marketplace, the March Nasdaq has forged a recovery attempt in the early action today and we would not be surprised to see an additional lift provided by corporate earnings news, but we just don’t think that corporate earnings or a third tier US economic reading is capable of taking the negative tilt completely out of the equity markets. However, those looking to get short this market, might wait until after mid day to step into short side positions. In fact, one should probably wait for a bounce back above 1756 in the March Nasdaq to re-enter a short side trade.
TODAY’S MARKET IDEAS: The bull camp might be able to control for the first half of the trading session but we fear that the afternoon will bring on the sellers again.
Tags: DOW, Financials, NASDAQ, S&P 500, Stocks
About Dave Hightower