US EQUITY POST FOMC RALLY STALLS ON DISAPPOITING PROFITS FROM EXXON MOBIL, SENTIMENT OVER CHRYSLER BANKRUPTCY.
US EQUITIES ended a volatile session flat to slightly higher as the technology sector, with its cash rich position, posted the highest gains of the session as financials, consumer, and material stocks retreated after touching technical resistance levels overnight. Positive sentiment over the near 10 to 1 ratio of outperforming to underperforming earnings reports received a reality check after Exxon Mobil posted a lower than expected earnings and Chrysler Motors brought speculation into reality as the automakers declared bankruptcy and moved forward with its planned merger of support with Fiat Motors. The action by Chrysler (with just a little support from the US Government) offered a reminder of the significant economic problems which still exist and require time and pain to work through. The government also struck a blow to the financial sector through its criticism of the inability of financial institutions and hedge funds to police the abuses of debt offered to the automakers as well as the inability of the parties involved to work out an alternative solution besides the bankrupting of a key US industrial entity.
It is likely that negative sentiment ay build going into next week as the end of the curve issue of employment will grab hold of traders focus. The US read on unemployment begins next Wednesday and culminates on Friday with the release of the BLS figures on nonfarm payrolls and unemployment.
Early gains in the market were achieved in the face of mixed economic data as worse than expected readings on US personal income and consumer spending were checked by fewer than expected new unemployment claims and a higher reading from the Chicago Purchasing managers Index. Earnings were mixed today as lower profits from Exxon Mobil due to falling crude prices were offset by better revenue numbers from Visa. NASDAQ futures posted the highest gains today on better earnings from Expedia and continued inflows of capital into companies that are perceived to have relatively low debt levels and strong cash positions.
Technically, June Dow Futures tested and bounced off a significant resistance level at 8260. The pullback came from a classic overbought 60 minute RSI indicator which peaked very close to 70 this morning. Support for the Dow has set initially at 8070, with 7992 as a likely support for Friday’s session. Looking into next week, the market could see a further pullback to test the low end support of 7835. New up target resistance level seems to be setting up at 8368.
EQUITY RANGES
OPEN
HIGH
LOW
CLOSE
CHANGE
DJM9 (JUNE DOW)
8225
8255
8085
8126
+1
SPM9 (JUNE S&P)
880.00
885.70
864.80
870.00
+0.90
NDM9 (JUNE NASDAQ)
1396.00
1418.00
1382.50
1393.50
+15.75
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.
