EQUITY FUTURES CLOCK IN FOURTH DAY OF RALLY AS FINANCIAL EARNINGS, FOMC MEETING DOES NOT RAIN ON SENTIMENT PARADE.
U.S. equities managed to post their longest daily winning streak in weeks as the financial sector staged double digit percentage rallies. Nearly every sector of equities took heart that the U.S. Government was moving forward with plans for the creation of a “Bad Bank” designed to consolidate the toxic debt plaguing traditional financial institutions and freezing the credit lifeblood needed to stimulate the world’s economies. The gain in equities was further supported by the lack of surprise from the FOMC meeting. The Fed kept its zero target interest rate range with indications that it expected to maintain these levels for an extended period. In addition, the Fed stated that it would maintain its commitment to holding down overall lending rates through direct purchases of mortgage backed and agency securities. This portion of the announcement stoked additional downward movement in Treasuries and offered continued support to equities.
Equities showed positive momentum from follow through from the Asian and European markets. The Korean Kospi actually halted trading after a 6% rise in the index. Overall, higher moves in the equities were fueled by a renewed sense of global support and doing whatever it takes to try and reinvigorate the world’s financial institutions. A continuation of this sentiment may find some headwinds as the announcement of details highlight both positive and negative aspects of the plans. In addition, the overhang of next week’s unemployment numbers will offer a dismal reminder of the seriousness of the financial crisis and could likely trigger some pullback in equities.
Technically, March Dow Futures broke to the upside above its recent channel closing very close to an overbought condition. The spike up move managed to nearly fill a gap left from the break at 8500. This could suggest that the upward movement is not set on a strong foundation and that a retracement back to the 8170 level is possible. Look for strong resistance at 8480, with a break above 8560 signaling a retest of the long term high target of 8800.
EQUITY RANGES
OPEN
HIGH
LOW
CLOSE
CHANGE
DJH9 (MARCH DOW)
8250
8350
8217
8322
+229
SPH9 (MARCH S&P)
858.50
875.50
856.50
871.50
+32.30
NDH9 (MAR NASDAQ)
1210.00
1244.00
1210.00
1231.25
+45.50
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.