EQUITY FUTURES POST A MOST VOLATILE SESSION AS MARKETS RALLY FROM MONTHLY LOWS ON BETTER THAN EXPECTED EARNINGS, RENEWED GOVERNMENT PLAN TO HELP HOMEOWNERS.
U.S. equities returned to mirroring Disney’s “Mr. Toad’s Wild Ride” as a late day rally supported by the announcement that the Obama administration is working on a plan to subsidize mortgage payments for troubled homeowners managed to overcome the negative sentiment which controlled the markets for most of the session, driving equities, led by retail stocks, to retest the lows for February. The markets teetered on the brink of failure throughout most of the session after a surprisingly positive report on retail sales was dismissed as an anomaly. Instead the market took its data cues from new unemployment claims which came in higher than expected. Downward momentum took control in the later part of the session, with S&P futures retesting their lows for the year.
The move seemed to be setting up for a breakdown that could have made a run for the November 2008 lows. Having the market hold above these technical levels gave enough of a reprieve that traders were able to shift focus to positive earnings from the consumer staples sector. Coca Cola rallied nearly 8% on better than expected quarterly earnings. Once again, Nasdaq futures posted the highest gains as value continued to be perceived in cash rich sectors that have the ability to ride out an extended recession. Financials and homebuilders were among the day’s biggest losers after a report which showed that U.S. home prices fell a record 12% in the fourth quarter of 2008, demonstrating the acceleration of lost revenue opportunity within the sector. Volatility appears to be returning to the market, driven by searches for financial opportunity as much as fear. Trading, not investing, is still driving market moves and until the focus is able to switch to a longer term view, the markets should continue to trade within a widening channel, but a channel nonetheless.
Technically, March Dow Futures are not out of the woods despite the reprieve of the late session rally. At the lows of the session, the markets did not offer an indication of being oversold. With the maelstrom of fundamental uncertainty within key industrial & financial sectors continuing to influence market psychology, expect a period of lower highs in the midterm. Strong resistance should be found at the 8050 level, while 7620 appears as a near term support, with a target downside level of 7320 should this not hold.
EQUITY RANGES
OPEN
HIGH
LOW
CLOSE
CHANGE
DJH9 (MARCH DOW)
7790
7940
7660
7937
+41
SPH9 (MARCH S&P)
816.80
836.50
806.00
835.40
+3.90
NDH9 (MAR NASDAQ)
1212.00
1246.00
1203.00
1245.25
+20.75
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. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
