EQUITY FUTURES TRADE TO BOTTOM LEVELS OF NOV. 2008 ON WORSE THAN EXPECTED PHILLY FED, EMPLOYMENT PICTURE
U.S. Equities broke down after what appeared to be a promising start in the early session turned negative, allowing most of the major averages to close at lows reached in November 2008. While technologies began the initial negative sentiment in Wednesday’s after session due to Hewlett Packard reporting disappointing earnings, it was the renewed fall of pressured financial institutions Bank of America and Citigroup, which led the banking sector to close at its lowest levels since 1992. Financials were once again the forbearers of perceived economic doom as a greater than expected negative reading from the Philly Fed Index and a greater than expected reading on PPI (Producer Price Index) set up a bleak picture of an economic landscape heading from economic depression to inflationary pressures.
Fears regarding the potential for the government to nationalize financial institutions in the wake of perceived failures of the industry to police itself sent the entire S&P financial index to its lowest level since 1995, the very levels that many expect the major market indices perhaps find a level of value and support. The technology sector fell nearly 3% overall after H&P disappointing earnings numbers. Technologies have been the most resilient sector in a highly disappointing 2009 outlook for equities.
Overall, the market was helped from gains in energy, consumer and telecom sectors. Energies stocks found buyers after a surprising EIA inventory number showing the first drawdown in crude supplies in a number of weeks. While nationalization of financial institutions as a whole seems a daunting prospect for the equity markets, it could possibly be made more palatable if the move came along with provisions for downsizing many of these unwieldy financial institutions. This movement could offer a realistic chance for the markets to achieve the long-term levels of transparency and ability to build a revenue base, which could offer a floor under the freefall of the financial sector.
Technically, March Dow Futures continue along the support level of 7450 Momentum should continue to pressure the markets to a support level of 7260. Expect resistance to form at 7680.
EQUITY RANGES
OPEN
HIGH
LOW
CLOSE
CHANGE
DJH9 (MARCH DOW)
7580
7596
7430
7462
-21
SPH9 (MARCH S&P)
793.00
796.50
775.00
779.40
-10
NDH9 (MAR NASDAQ)
1194.00
1202.00
1164.00
1170.50
-9.50
Rich Roscelli and 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 because of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
