Bond & equity report for Feb. 4

SUMMARY OF UPCOMING DATA 02/03/10

  • 8:30 AM: (U.S. JOBLESS CLAIMS 455 K)
  • 8:30 AM U.S. PRODUCTIVITY/COSTS (7.0%, -3.8%)
  • 10:00 AM U.S. FACTORY ORDERS (0.3%)
  • 10:30 AM EIA INVENTORY NUMBERS (NAT GAS)

DATA RESULTS 02/02/10

  • ADP EMPLOYMENT REPORT (-22K)
  • U.S. THREE-, 10-, & 30-YEAR AUCTION ANNOUCEMENTS (3YR-$40B, 10 YR-$25B, 30 YR-$16B)
  • ISM NON MFG INDEX (50.5/51.0)
  • EIA INVENTORY FIGURES (CL-+2.3M, RBOB -1.7 M, HO -1.0 M)

U.S. DEBT REVIEW AND OUTLOOK

U.S. TREASURIES gave up recent gains on Wednesday as the complex broke through a number of near term support levels, moving to challenge the breakout downside of its range. U.S fixed income came under pressure after the ADP report on job losses (gains) in the private sector showed continued slowing in the pace of jobs lost. The data set the tone for Treasuries throughout the session; as traders took the report as a possible sign of better readings from Friday’s U.S. government data on payrolls and unemployment. Weaker than expected readings on growth in the services sector by the Institute for Supply Management failed to slow the fall in Treasury futures prices.

Expectations are for the markets to remain in a tight technical range ahead of Friday’s data. The March contract could take an attempt to test 116-24 between now and Friday. Initial support for the contract should be found at this level. Retracement range for 30 years to the upside should find resistance at 117-23 and 117-28, as a narrowing channel pattern is likely to form.

U.S. EQUITY REVIEW AND OUTLOOK

Stocks posted a mixed session on Wednesday, with the S&P 500 posting the worst record of the three major indices. NASDAQ futures actually posted strong gains today as value hunters came in to pick up perceived bargains in large cap tech stocks ahead of strong earnings numbers from Cisco. The bellwether for IT networking did post better than expected numbers after the market closed, though markets appeared to have factored that in already.

Negative sentiment on equities held through the broad market after a slightly weaker reading on the services industry was reported and traders looked to take some gains off the table after the two session rally off support levels in the major market indices. The markets traded in a relatively narrow range ahead of Friday’s U.S. employment data. Earnings continue to outperform most analyst expectations. However a breakout based on these numbers appears unlikely as traders continued to develop the mindset that the easy money has been made and the next catalyst to drive gains in stocks remains uncertain.

Technically, March S&P futures continue to work out its new range parameters. Resistance levels remain in place at 1103.00 and 1108.00. A close above these levels will set up possibility for run at 1118.00. Support remains in place at 1087.80, with a break of this level setting up retest of 1082.00.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US H0 (US 30 YRS)

118-06

118-14

117-29

118-13

+8/32nds

SP H0 (S&P 500)

1087.80

1101.50

1084.30

1097.20

+10.20

Prepared by Rich Roscelli & Paul Brittain. PLEASE VOICE YOUR MARKET OPINIONS, THOUGHTS, AND QUESTIONS. EMAIL TO RICH@BINVSTGRP.COM. Additional Information can be found at WWW.WHITEHALLVEGAS.COM

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. Whitehall Investment Management, 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.

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