Investors are hanging onto a Turnaround Tuesday attempt as some much needed technical and news-related relief wakes up blurry-eyed traders stateside. As of 10:30 ET, the S&P500 ($SPX) and NASDAQ Composite ($COMPQ) are up .90% to 1.18% on above average levels of âsnapping up bargains."
"Gapping and some snapping" is the more likely result of buyers' collective efforts in Tuesday's early going. Nonetheless, the price stabilization and potential for some technical-based mending are finally setting up for investors' beast of burden. Strong overseas gains spearheaded by short-term oversold and hard-to-handle corrective conditions, soothing words from the Treasury and a bit of influential merger news from Citibank (C) highlight the bulls [and bears] early efforts.
An out-the-gate GLOBEX bid in the "futchahs" set the stage for today's still green market, as investors look to pick up some of the pieces from a global multi-day correction in the financial markets. Dow ($INDU) component stock and money center operator Citigroup (C) is to thank in large part. Traders have responded well to news that the company has made a $10.8 billion bid for Japan's Nikko Cordial, the country's third-largest securities outfit. If approved, the deal represents the largest merger in that market's history. Shares of Citigroup are higher by a point at 50.25.
Also helping the market's smoking rally, an upgrade of Altria (MO) to "Buy" from "Hold" has been met with some aggressive snapping up of shares. The stock is up 1.75 at nearly $84 a share after Deutsche Bank offered a report stating that the company's stock price was well-undervalued minus the impending Kraft (KFT) spin-off [MO-ex-KFT est. value $60.91 vs. fundamental value $71]. Another bit of good news for the bulls were positive comments made by Henry Paulson overnight in Tokyo. The Treasury Secretary emphasized something along the lines of the global economy, housing and mortgage-based securities market being in good shape, despite what the popular press has been spinning lately.
Traders can also be thankful for a reprieve from influential negatives that have infiltrated investor strategy of late. Easing headlines of Wall Street's rocket scientists misfiring on the Yen carry trade is certainly calming some nerves. With the Yen (FXY) moving lower some of the market's recently acknowledged risk averse investors can focus on money management and other activities without stirring up further concerns and asset dislocations. Also, a quieting down of sensationalist headlines in the sub and prime markets is âlending a hand.' While the damage in many of those names (NEW, MTG, CFC, NFI, JPM, BAC) is apparent and potentially far from being resolved, elsewhere, investors are apparently willing to start the process of forgiving and "Buy, Buy, Buy!" once more.
Elsewhere, with the broader markets rebounding on bargain-hunting efforts, commodities of all types are also finding, not-too-surprisingly, enthusiasm on the part of buyers. In the metals group, the benchmark Comex Gold (IAU, GLD) is up 1.01 at 64.03 and the Silver ETF (SLV) is tacking on 3.25 at 128.75. On the liquid side of things, Black Gold (USO) is up 49 cents at 50.11 as investors attempt to say "Domoarigato Mr. Roboto" to overly fearful concerns of weakening Asian economies and their impact on commodity prices.
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.
.66 / .49
.66 / .77
Economic releases on tap:
Wall Street Forecast
INDICES & MARKET MOOD
Oversold has finally become a bit less during the Noon Balloon. Actually, percentage gains of one-plus percent in the broader market [sorry Dow ol' boy] have quickly removed a good deal of that excess by way of secondary indicators. Price on the other hand, still has a ways to go. Although, the case for resistance being overcome is the task still facing market bulls. A couple of potentially bearish-sounding economic reports attempted to solidify some of that resistance. Both weaker-than-expected factory orders [-5.6% vs -4.0%] and Q4 productivity attempted to make investors flinch from their bids, but ultimately to no avail.
The factory orders data was essentially dismissed or lost in the intraday shuffle, while productivity figures showed an expected and near consensus revision lower to 1.6% from a prior reading of 3.0%. That's not so bad according to analysts, but one bit of concern might be unit labor costs which more than doubled estimates with a figure of 6.6%. However, with a market platform for "snapping up bargains" and the more important jobs data with its hourly earnings component not until Friday: the bulls are running with the idea of Turnaround Tuesday intact and an intermediate-based Attempted Rally Day very much in the making.
Index or Sector Proxy
S&P500 ETF (SPY)
Neutral / LT Bear
138.05, 136.20 - 137.50
142 - 144
NASDAQ 100 (QQQQ)
Neutral / LT Bear
41.75 â 42.25, 40.60, 39.40 - 40
43.80 â 44.50
Staff Writer & Options Strategist
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