EQUITY FUTURES STAGE STRONG TURNAROUND AS INVESTORS SEE VALUE IN EARLY BEAT DOWN OF TECH SECTOR, RECOVERY IN FINANCIALS, RETAILERS.
U.S. Equities staged a strong turnaround in today’s session as the markets failed to succumb to overnight pressures brought on the tech sector after Cisco Systems earnings fell short and U.S. weekly jobless claims posted the largest period gain since the 1980’s. The reception of this bad news appeared to set the stage for a pre jobs data retest of recent equity lows, as NASDAQ futures which had been the rally leaders through recent session on perceptions of concrete value and opportunity started the session lower by over 20 points. Perception of bargains in the sector as a whole as well as better than expected earnings from software companies and retailers helped to turn NASDAQ futures around to positive territory and eventually lead the other major indexes higher to retest recent resistance levels. In all, it was a surprisingly volatile day considering the usual apprehension by traders and investors to take on strong positions ahead of the Friday employment data. However, the markets appeared to shrug off some of the apprehension for what is likely to be a dismal employment figure and instead chose to focus on the potential “light at the end of the tunnel” on speculation that Washington was reconsidering the notion of mark to market accounting, the financial measure which is considered to be one of the primary barriers to allowing financial institutions to dilute the losses from toxic mortgage based securities off of their books.
Bank of America, State Street Investments and Moody’s all lead the financials higher while Visa and MasterCard gained on better than expected earnings. Retailers turned around from recent drops as Wal-Mart posted strong earnings. Homebuilders also rallied on expectations that the U.S. Senate’s revised version of the stimulus package will contain expanded tax credit plans up to $15,000 for new home buyers.
Technically, March Dow futures remain within their current channel and maintaining support and resistance levels between 7860 and 8060. Upside initial breakout level forms at 8160 with 8260 being a level that a possible breakout could occur. Downward momentum below 7805 could likely create a setup for a test and break below the 2008 lows.
EQUITY RANGES
OPEN
HIGH
LOW
CLOSE
CHANGE
DJH9 (MARCH DOW)
7880
8065
7800
7994
+69
SPH9 (MARCH S&P)
822.50
848.50
817.00
840.50
+10.70
NDH9 (MAR NASDAQ)
1195.50
1249.00
1195.50
1234.50
+20.50
Prepared by Rich Roscelli & Paul Brittain.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities.
