An in-line reading on inflation, some expired bears to be certain and a âsoft patch' for one operating system are adding up to a bit of profiteering off the latest top. As of 10:30 ET, the S&P500 ($SPX) and NASDAQ Composite ($COMPQ) are trading under slight pressure of -.28% to -.41% respectively.
Friday's top story is the in-line reading of the wholesale PPI data released in the premarket. With a more dovish Fed discovered during Congressional testimony this week, today's -.6% headline drop and .2% core increase stand to confirm that price pressures are moderating. That being said, with expectations essentially matched and a rather vigorous 1.64% to 1.91% climb at altitude for the last three sessions, today's early pressure looks to be the result of pent up profit-taking. On the report, a rally in the bond market has sent the yield on the key 10-year to a one month low of 4.69%. With next week offering up the more important CPI figures, some traders and analysts are finding that that bit of uncertainty a reasonable catalyst for securing quick short-term gains.
Excuses for profit-taking might also toss in a âspent' expiration bias typically bullish these days, as well as the 3-Day Presidential Cycle. Further headline reasons for managing market-weighted portfolios can blame tech heavyweight Microsoft (MSFT) and an exaggerated three alarm fire on the housing front. On the corporate side, the world's largest software company is apparently experiencing a soft patch of sorts in Friday's early trade. Friday's news is related to an announcement by the CEO that analysts' forecasts for sales of the new Vista O/S rollout are "overly aggressive." In its first week of offering the new operating system to the world at large, unit sales are 59% below the benchmark set by their last foray set with Windows XP. Off the report, MSFT is down 70 cents at 28.76 and testing fresh two-month lows.
As for the other cry of "fire" this morning, January housing starts plummeted 14.3%. The hard drop also marks a ten year low for builders. However, much of today's weakness is attributed to the bitter cold snap that's plagued the eastern half of the United States. For its part, the homebuilding sector (XHB) is down slightly [-.37 @ 38.13], but not exactly receiving the hammer by concerned investors. Adding to the economic mix, some U of M'ers apparently aren't satisfied with conditions at large. While analysts agree that sentiment readings aren't highly correlated with actual consumer intentions to "Buy, Buy, Buy!!" the 93.3 reading versus expectations of 96.5 is nonetheless offering an easy excuse for some investors in Friday's first half.
GROWTH & MOVERS COVERAGE
Industry / Sector
RS / EPS 1YR%
Select reports scheduled after the market close and in the premarket:
Industry / Sector
Q-Estimates / Prior Yr.
.51 / .60
.47 / .41
.39 / .76
.90 / .84
Economic releases scheduled for tomorrow:
Wall Street Forecast
INDICES & MARKET MOOD
Friday marks 2007's second expiration and a session prone to being difficult for bulls and bears alike. On that note, I guess "so far, so good" comes to mind, as long as you're not directly involved in the lethargy at large. Elsewhere, Honeywell (HON) becomes the third Dow stock opting for a decent-sized corporate buyback ($3 billion), instead of finding a way to put the money to use elsewhere. Just off five-plus-year highs, investors are showing as much enthusiasm for the stock as the slight sarcasm penned here, up 3 cents at 47.60.
And finally, one product outside of the major averages that is moving is the Black gold contract. March futures are finding a somewhat tricky bid, up over a point at 59.13. News on the day has traders growing concerned that militant attacks in Nigeria will disrupt supplies. Somewhat interestingly, strength in the contract hasn't fueled a similar bid in the energy complex (XLE, OIH), as both are very flat on the session. Chalk it up to some expiring bull, I guess. Have a great three-day holiday!
Index or Sector Proxy
S&P500 ETF (SPY)
ST Bear / LT Bear
141.50, 139 â 140.50
146.50 â 148.35
NASDAQ 100 (QQQQ)
Neutral / LT Bear
43.29, 42.50, 41.50 - 42
45 â 45.50, 46.25- 47.25
Staff Writer & Options Strategist
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The information offered here is based upon Christopher Tyler's observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.