The Hightower Report

Below is a sample of The Hightower Report’s 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!

Global equity markets turned lower during the early morning hours as they turned focus to more corporate earnings and the result of a 2-day FOMC meeting. While shares were modestly higher in Japan, the major global indices turned lower in Europe. It seems that lingering Greek debt default fears as well as disappointing quarterly results from Ericsson, which reported a plunge in quarterly demand have undermined sentiment. The German DAX is showing a smaller loss this morning, perhaps helped by German sentiment data that was up for the 3rd month in a row, as that in turn suggests the German economy might be able to stave off a recession. Last night’s State of the Union address from President Obama offered little lasting support to the stock market, but it was seen by some as a campaign speech. US economic data this morning offers up a look into the housing market, with December Pending Home Sales expected to show a slight decline from the November reading. More importantly is today’s verdict of the 2-day FOMC meeting.

S&P 500: The March S&P continues to dance around a short term equilibrium level at the 1311.00 area, with the last four daily settlements falling inside of an extremely tight 1-point range. This coiling-type action suggests that the market is in search of fresh fundamentals for its next direction. Meanwhile, some traders viewed the recent action as “toppy” and did not want to increase risk after the strong start of 2012, especially in front of a FOMC meeting result later in the session. ConocoPhillips was trading higher in early morning action on the hopes that the company can deliver a strong Q4 earnings report. Expectations are for the company to show an 11.5% increase from the year ago quarter. Yesterday’s mid-day weakness breeched swing low support but was able to end on a strong note. Nonetheless, the short term trend for the March S&P looks tired and due for a correction. Uptrend channel support this morning comes in at 1301.50.

DOW: The March E-mini Dow established a higher high during the early morning hours but has since turned into negative territory. It is possible that some of the early lift in the index came from a 1.0% gain in Boeing shares on reports of new business from Norwegian Air Shuttle. Boeing releases their Q4 earnings before the Wall Street open and are expected to show a nearly 10% decline compared to Q4 2010. United Technologies releases their Q4 earnings this morning, which are expected to show earnings growth of nearly 11.0% compared to Q4 2010. While yesterday’s earnings from Dow components McDonalds, J&J and DuPont came in better than expected, they failed to inspire fresh enthusiasm to the upside. This could be a sign of a market that has become tired and overbought. The intermediate term price trend in the March E-mini Dow points up, with support at 12,553. Confirmation of a move below 12,486 could put the bear camp on top.

NASDAQ: The March NASDAQ registered a new contract high overnight helped by Apple earnings. The company posted record sales and profits on the quarter that were supported by very strong holiday demand for its iPhone and iPad. Shares of Apple were up nearly 7.0% in German trading this morning, and that is a force that should limit weakness in the index this morning. Meanwhile, Yahoo’s Q4 revenues and sales fell short of estimates amid weak advertising demand. There was also a pair of warnings from AMD and Altera Corp yesterday that pointed to weaker tech-related sales prospects ahead. The bulls have the advantage this morning and remain in a short term uptrend pattern. Key swing low support for the March NASDAQ stands at 2419.50.

TODAY’S MARKET IDEAS: The major US indices start on a softer note this morning, with the exception of the NASDAQ which is benefiting from new record high prices in Apple. However, recent low trading volumes, growing level of complacency and overbought technicals suggest that the US indices could be ripe for a correction. There also appears to be change in sector leadership, with recent gainers failing to participate on rallies. Some technicians suggest that the current wave pattern in the S&P 500 is nearing the conclusion of its b-wave rally (off the October low), which suggests that next primary leg in the index is down, potentially targeting the 1050.00 area in the March S&P 500. We would like to see a bit more confirmation of a turn before getting short. Aggressive bears might consider buying out-of-the money puts on strength.

Below is a sample of The Hightower Report’s 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!

Global equity markets were facing a number of negative headwinds overnight, including an S&P ratings downgrade of 15 banks, some disappointment with the Euro rescue fund efforts and further signs that China might be slowing. After yesterday’s close, S&P lowered their ratings for 15 major global banks by one notch, and that pressured global equity markets in the overnight action. Asian equity markets were considerably lower, led by weakness in the Chinese Shanghai Composite. While there is evidence that export growth to Europe has slowed, this morning’s unexpected move by China’s Central Bank to cut bank reserve requirement ratios has helped to turn the early tone positive. Meanwhile, global equity markets maybe holding up better than might be expected given general disappointment over the latest Euro zone rescue fund developments. Some analysts indicate that the size of the fund has fallen short of the 1-trillion mark, forcing EU ministers to pursue other more creative funding options, like the IMF. Perhaps the trade is hopeful that the EU will eventually do what is necessary and perhaps the trade is simply anticipating favorable private US payroll data this morning, which is expected to show gains to levels not seen since April. The markets also appear to be anticipating a positive read on Chicago ISM and pending home sales figures.

S&P 500: Overnight and early morning action in the December S&P 500 has formed a bullish outside day reversal that reflects a positive shift in sentiment. While the index came under overnight pressure following the S&P ratings downgrade of 15 major global banks, action taken by the PBOC this morning to ease monetary policy has helped to shift the tide in favor of the bulls. Meanwhile, the December S&P 500 showed a level of vulnerability yesterday, held back by underperformance in the financial sector. Shares of Tiffany & Co were down nearly 9.0% yesterday, following weaker than expected earnings and holiday sales warnings. The December S&P 500 is on a bullish track this morning after taking out yesterday’s high (1203.00), which leaves the next level of resistance at last week’s gap of 1209.00 to 1214.00.

DOW: The December E-mini Dow had a gap lower opening Tuesday evening in the wake of a surprise banking sector downgrade from S&P. While this might help explain the relative underperformance of the banking sector during yesterday’s trade, it did pressure shares of Bank of America below $5.00 in after-hours trade. Yesterday’s bankruptcy filing of AMR has the potential to provide an added drag on the shares of Boeing today, and also that could put recent Airbus sales in jeopardy. The short term trend in the December E-mini Dow offers the bull camp the advantage, with 11,615 as resistance. Near term support for the index comes in at 11,436.

NASDAQ: December NASDAQ reversed overnight losses this morning in the wake of China’s Central bank decision to reduce reserve requirement ratios. While this should inject a level of optimism into tech-related shares this morning, there are also positive headlines involving Yahoo. Reports that a private-equity group has offered $16.70 for a minority stake in Yahoo should provide an added lift. That offer is a little more than 6.0% above Tuesday’s settlement price. The bull camp gets the early nod, with resistance at 2245.00, then at the November 21st gap up to 2249.75.

TODAY’S MARKET IDEAS: With the month of November drawing to a close, there is the potential for end-of-month volatility today. Some traders note signs of institutional buying in the futures market, and that is a force that could gain more traction toady and in coming week’s as funds wind down for the year. In the meantime, US equity markets face growing negativity surrounding the European debt crisis (slow on specifics) and slow-growth concerns in India and China. These negative forces have been put at bay to start this morning’s, but they present headwinds to any meaningful upside attempt. This morning’s flow of US economic data is expected to come in positive, and disappointment there could leave the bull drive vulnerable. Given the prevailing intermediate down trending patterns in the December E-mini Dow and S&P 500, we continue to view rallies as selling opportunities.

Below is a sample of The Hightower Report’s 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!

Heightened risk aversion keeps global equity markets on edge, especially after warnings of a downgrade to US credit ratings if a debt ceiling deal is not reached. Moody’s came out late Wednesday and warned of the growing threat that a US Debt deal would not be reached by the August 2nd deadline, leading to a US default on its obligations. This weighed on global equity markets overnight and detracted from the optimism created by QE3 prospects, expressed by Fed Chairman Bernanke during Wednesday’s testimony. Fed Chairman Bernanke goes in front of the Senate this morning and is expected to acknowledge a persistently weak US economy and potential for more stimulus. It probably takes something more than yesterday’s comments to manufacture another rally today. While that news was well received yesterday, equities are also more keyed in on US deficit reduction talks that are expected to continue today. Equity markets are concerned by a number of big picture items, including the European debt crisis, US debt ceiling debate and the start of second-quarter earnings season. That uncertainty has fostered flight to safety movement into precious metals. Some of that uncertainty surrounding Q2 earnings will be answered today with results from JP Morgan early this morning and Google this afternoon.

S&P 500: The September S&P 500 established a lower low overnight in the wake of Moody’s US credit downgrade warning but has since returned back toward unchanged levels. It is possible that the index garnered a level of support from positive action in the shares of YUM Brands after the company reported earnings and raised their full-year outlook. In addition to an active economic calendar this morning, with expectations for a slight decline in initial jobless claims and fractional increase in June PPI, the market will be watching earnings from JP Morgan this morning. Analysts are expected to pay closer attention to the company’s future business prospects rather than actual earnings. Wednesday evening’s breakdown leaves the bear camp with the advantage this morning. Resistance above comes in at 1315.00 and 1320.50. Key support below stands at 1305.00 and the 1290.00 area.

DOW: The September E-mini Dow extended Wednesday’s late session slide but has since turned back into positive territory. Ideas that another round of stimulus could be in the cards for the US economy, if conditions warrant, helped lift the Dow to session highs yesterday. The Dow Jones Index also garnered support from sizeable gains in the energy sector, which benefited from a rally across the energy complex. Weakness in the September E-mini Dow this week has been contained by retracement support of 12,370, which leaves it a key downside level today. The short term trend favors the bears, with resistance above at 12,490 and 12,625.

NASDAQ: The September NASDAQ established a new 8 session low overnight, but has since reversed into positive territory. Tech-related shares got a big boost in Wednesday’s session on an improvement in risk appetites and prospects for QE3. That positive tone has since been watered down by a potential downgrade to US credit ratings. Google reports their quarterly results after the close today and is expected to show fractional improvement from last year. The trade will likely keep a close watch on the company’s efforts within the social networking space. Shares of Amazon could get a boost in today’s trade after they announced plans to introduce a new tablet computer in October. Early morning trade in the NASDAQ has been choppy, and leaves the bear camp with a slight edge after this week’s slide. Resistance comes in at 2365.50, with 100 day moving average support below at 2314.00.

TODAY’S MARKET IDEAS: A threat to the US credit rating, breakdown in US debt ceiling talks and the prospect for another round of quantitative easing have kept the market volatile. This morning’s economic calendar could put slow down fears front and center if the 7:30 AM CT numbers disappoint. There is also the threat that the European debt situation comes back into focus ahead of weekend meetings and as the market grows impatient waiting for a solution. The market will also receive some big earnings results in the session that are also worthy of attention. The intermediate term trends in the September E-mini Dow and S&P 500 favor the bears to start.

Below is a sample of The Hightower Report’s 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 stock market has tried to throw off the slowing mentality this week but the flow of weak data has been fairly consistent. The market seems to be of a mind, that last month’s bulge in energy prices wounded the US consumer and that the numbers this morning will reflect the headwinds facing the recovery. With the markets also seeing fresh legal action against a major US investment bank, slack retail sales views, uncertainty off the US budget situation and residual fears off the Greek debt problems, there seems to be at least 3 or 4 bearish themes populating the headline flow. Therefore investors could take a large measure of direction from the payroll readings this morning, as there has to be some hope of growth and momentum, to decide to weather the risk presented in the current marketplace. With Moody’s yesterday indicating that they might cut ratings on a number of US Banks and the markets coming away from this week’s trade with fresh concerns for the US housing sector, the market might need to see a patently weak payroll reading and a sharp range down move on the charts to fully adjust stock prices for the new slower reality.

S&P 500: While the June S&P has managed to hold above the Thursday low in the early Friday morning US action, the technical picture from the charts doesn’t look that encouraging. Some traders see a developing pattern of lower highs and lower lows and given the flow of macro economic and political news this week, that pattern seems to be justified from a fundamental perspective. Some traders aren’t ready to call for a key low in the S&P until there is an exhaustion failure on the charts, with a reversal within the same session. In fact, the odds of a temporary test of the sub 1300 level looks possible today in the aftermath of the payroll release.

DOW: While the June Mini Dow initially managed to respect the prior session’s low in the early Friday trade, a recent pattern of lower lows has settled onto the charts. With a ratings threat against some US banks, the trade accepting of slowing activity and recent damage on the charts, the bear camp would seem to hold most of the cards to start the last trading day of the week. Big cap stocks might also be somewhat undermined by ideas that China might be poised to raise interest rates again. Down trend channel support in the June Mini Dow is seen at 12,169 today, with that level falling down to 12,161 on Monday.

NASDAQ: With an initial slide in the early action today, the bear camp this morning probably feels like it has the technical picture working in its favor this morning. With Walmart apparently seeing the need to revise its strategy to win back customers and the market recently presented with some poor retailing numbers this week, it is clear that investors are accepting of the idea that high energy prices have indeed dampened activity in the US economy. Therefore the non farm payroll readings this morning might take on a significant role in the market today, especially given the initial attempt to push the NASDAQ down overnight. Some traders see a critical pivot point at 2317.00 this morning but to turn the tide back in favor of the bull camp might require a rise back above 2327.00.

TODAY’S MARKET IDEAS: The fundamental and technical tracks look to remain down with the market seeking fair valuation. With growth suspect and the end of easing anticipated at the end of the month, it could take some dovish commentary from key Fed officials to actually shut off the downward track in equity prices. In fact, when one adds in the budget mess in Washington and the tightening bias from China, a number of roads seem to lead to even lower equity prices ahead.