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1:30pm (EST)
You can almost feel the tension today between the bulls and bears as the market has stayed in a tight trading range. The major indexes are showing slight gains as better-than-expected numbers on housing and retail have provided the bulls some ammo heading into Friday’s update on employment.
DJIA 15-Minute Chart
The National Association of Realtors said contracts to purchase homes rose 5.2% in July after hitting a record low in June while factory orders climbed 0.1% in July.
The monthly report on jobs will be the biggie, of course, and it will be released before the market opens. Although there is a little hiring going on in America, the numbers are expected to indicate an unemployment rate of 9.6%, up 0.1% from last month. The market will be counting on the private sector for growth but they only hired 40,000 workers last month.
In corporate news, Hewlett-Packard (HPQ, $39.34, up $0.13) raised its bid to $33 a share for data storage provider 3Par (PAR, $32.85, up $0.77). Dell (DELL, $12.40, up $0.28) had upped its offer to $32 a share in a last gasp effort to “outbid” HP but they don’t have the cash coffins to trump $33.
As we head to press, the Dow is up 2 points to 10,270 while the S&P 500 is advancing by 4 points to 1,084. The Nasdaq is showing a 10 point gain and is at 2,187.
We are watching the 1,075 level for support on the S&P 500 with 1,100 being a ceiling for today. We should probably stay within that range for the remainder of the day but a break above or below these levels means somebody knows something ahead of tomorrow’s big news.
We established 3 new positions ahead of Friday’s unemployment report but we protected ourselves by going out until October with our trades. You can bet tonight will be an uneasy night of sleeping but this is why we play the game. Subscribers, check the Members Area for the updates.
Durable Goods Disappoint
Wednesday, August 25th, 2010
9:00am (EST)
Turn out the lights, the party’s over…
We remember in our younger years when Dandy Don would sing this song to close out the Monday Night Football games back in the day. Although the games may have been close at times, he always knew when the right time was to sing that song.
We have been spot on in calling the slippery slope the Dow is traveling down and yesterday’s economic news was far worse than most analysts wanted to believe. Existing home sales are at their lowest level in 15 years and America has nearly a 4 million unit backlog.
The Dow opened with a triple-digit loss and fell below the 10,000 level for the first time since early July. Although the bulls made a slight comeback shortly before lunch, the market was unable to gain enough momentum to break into positive territory as selling pressure picked up into the close.
The Dow still managed to lose 134 points, or 1.3%, and finished at 10,040 after falling to a low of 9,991. We said in our Weekly Wrap Sunday night that the bears would target Dow 10,000 and then 9,800 and so far we couldn’t have drawn it up any better in the sand. A break below 9,800 paves the way for a test of 9,500 and resistance will now come in at 10,200.
The S&P 500 got whacked for 16 points, or 1.5%, and closed at 1,051. Our near-term target of 1,050 has also been reached and now the 1,000 level will come into play. There will be some support in the 1,020-1,025 area but a break below the aforementioned levels could push the S&P down as low as 950.
The Nasdaq closed below our 2,150 target after giving back 36 points, or 1.7%, to settle at 2,123. Tech has been the “Ace in the Hole” for both the bulls and bears and right now the bears are crushing the high beta names. Our next stop should be in the 2,050-2,070 area with a test down to 1,900 if the bears go all-in.
Futures were already pointing towards a negative open but worsened after Wall Street got the latest durable goods numbers. The report showed orders rose 0.3% versus expectations for an increase of 3.0%. Excluding transportation items, the core reading showed a decline of 3.8% versus calls for an increase of 0.5%.
As a result, Dow futures are lower by 51 points to 9,972 while the S&P 500 futures are lower by 6 points to 1,043. Nasdaq 100 futures are off by 13 points to 1,761. We should see some continued gains in our put option trades this morning as a number of our trades are showing lower pre-market bids.
Subscribers, check the Members Area for the early updates. We will be back at 1pm (EST) with our afternoon update but be on the lookout for a NEW TRADE if we see an opportunity before then.
Tags: durable goods results, option picks, stock options trading
Posted in Economic News, Market Analysis, Market Commentary | Comments Off