Stabilization overseas and a much lighter and likely appreciated news day are offering investors a technical pause after Turnaround Tuesday's solid gains. As of 10:45 ET, the S&P500 ($SPX) and NASDAQ Composite ($COMPQ) are fractionally mixed from a gainer of .08% to a slight decliner of -.14% on lighter and less volatile conditions.
It's been several sessions, but finally both prices and headlines are taking a much deserved break. US equities opened up slightly under pressure as existing, but tempered murmurs of economic growth for the economy resurfaced and bottom fishing after Tuesday's big percentage catch becomes a bit less likely for a still risk-averse Wall Street.
With global markets cooling down a notch overnight, traders are faced with a couple of economic bells and whistles in the first half which are contributing to today's early price contraction. The ADP employment report released in the premarket registered a weaker-than-expected number of 57,000 jobs created for the private sector. That figure represents the weakest gain since the summer of 2003. The potential upside for the bulls, though, is the report hasn't been highly correlated to the more important government sponsored jobs data due out on Friday. However, for investors portraying themselves as being risk averse and still focused on a slowing economy, it certainly doesn't help matters.
Equity buy side decisions are also being tempered as a percentage rally to recent year-to-date highs for the April crude contract is weighing on sentiment. An intraday release of weekly inventories registered a much harder decline in supplies than anticipated, adding extra fuel to an already firm session for the commodity. With the contract up 1.10 at 61.67-a-barrel, fresh concerns over the impact on consumer spending and corporate profits are likely to find an audience willing to listen and grumble.
For the bulls, all isn't lost in Wednesday's session, although the words spoken seem to be going mostly unheard and emphasizes a still cautious investor. Internet behemoth Google (GOOG) and one of the market's barometers for investors risk appetite is reflecting that point. Out-the-gate, share prices vaulted higher by roughly 5.50 points to an intraday high of 462.79 on an upgrade to "Buy" from "Neutral" from UBS. The firm cited compelling valuations and core business model as reasons behind the coverage change. However, intraday and during the lunchtime hour, Google is less GOOG with a decliner of 55 cents at 457. And finally, Greenspan is back after last week's role as crusader for the bears. From talk of a US recession being possible, today's words of a bottom having been reached in home sales, sound a bit more encouraging. However, with housing stocks (XHB, BZH, TOL, RYL) doing ânada', it seems some investors feel certain octogenarians should be playing chess somewhere other than the market.
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.
(.37) / (.28)
.66 / .62
.21 / .21
Economic releases on tap:
Wall Street Forecast
INDICES & MARKET MOOD
A lack of catalysts is being cited by Wednesday's subdued bull. In fact, many are saying the lighter volume rally was the result of shorts covering and not necessarily fresh bullish endeavors. That's probably correct to a certain extent, although it does emphasize the point of there actually being a population of bears out there. Considering how the move occurred over the last week, that seems a bit indulgent. On a similar note, it's amazing how headlines of "snapping up bargains" goes to the wayside as soon as first hint that the market isn't necessarily going to make life the bulls becomes temptation for headline script writers. What's it all mean? Probably that folks like to ascribe too way too many reasons to every up and down movement, as well as the lack thereof, and most look quite silly when viewed a day or two later.
What we do know by viewing our charts, rather than headlines masquerading as the answer, is that Turnaround Tuesday does mark the first day of a Follow-Through Day count for intermediate strategists. We also know that aside from today's price contraction, volatility is likely to continue in the coming days. Other than that, respecting the lows now cemented in many market products seems like a decent idea. And solidifying any directional efforts with limited risk strategies makes a still uncertain environment a bit less demanding.
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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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.