EQUITY FUTURES TRADE TO LOWEST LEVELS SINCE 1997 AS EARNINGS CONCERNS PRESSURE INTIAL RISE IN BANK STOCKS ON GOVERNMENT SUPPORT
U.S. Equities fell to their lowest levels since 1997, as the markets feared increased pressure on earnings due to the perception that the U.S. government’s plan to buy increased stakes in damaged financial institutions Citigroup and BOA could very well be a case of throwing funds away on entities that are incapable to standing on their own due to their top heavy nature and inability to generate revenue in the new world of decreased leverage and risk parameters.
Today’s decline, which accelerated from the opening of the day session after overnight gains from the weekend announcement of the government’s support plan faded, took Dow and S&P futures well below the lows reached in November of 2008 and into territory not reached since the mid 1990s. Despite gains in the aforementioned financial institutions, the overall market suffered a strong sell off on concerns that earnings will likely suffer as capital continues to support these institutions that appear incapable of offering pass through lending services to stimulate the business and consumer sectors.
Technologies and material stocks were among the worst performers, as analysts perceived the prolonged global slowdown would take a significant toll on earnings, bursting the belief that technologies, with its apparent limited exposure to the credit crisis, would lead the markets out of the current global recession. Alcoa was one of the worst performing stocks, down over 7%. General Electric lost nearly 6%.
Technically, March Dow futures have fallen off the cliff, breaking November lows and have moved through the target support of 7260. The market appears slightly oversold at this point and could retrace back to the 7220 level, Expect initial support to form at 7020, with movement through this level setting the market up for a test of 6880.
EQUITY RANGES
OPEN
HIGH
LOW
CLOSE
CHANGE
DJH9 (MARCH DOW)
7405
7420
7090
7116
-236
SPH9 (MARCH S&P)
776.50
778.00
739.80
745.00
-24.50
NDH9 (MAR NASDAQ)
1178.00
1178.50
1125.00
1135.75
-36.00
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.
