The Week Ahead: The markets continued a four week slide, but began to rebound from a low point reached after the employment report was digested showing a still deeply damaged job market. Tech stocks led the way off the low. A relatively quiet reporting period could provide a respite for stocks. Watch Tuesday’s Wholesale Trade Inventories, Thursday’s Retail Sales and Business Inventories, and Friday’s University of Michigan’s Consumer Sentiment reading.
Stocks to Watch: Auto parts makers were weak compared to the indexes after American Axle & Manufacturing (AXL) provided a disappointing outlook for the year in their Q4 earnings release. TRW Automotive (TRW), Dana Holding (DAN), and Arvinmeritor (ARM) all fell in sympathy. Airgas (ARG) soared to nearly an all time high after a $60 cash tender offer by rival Air Products (APD) which correspondingly dropped. Key earnings reports come from Disney (DIS), Coca Cola (KO), and Pepsi (PEP) later this week.
Special Note: If a near term rebound is starting, then an upside resistance target would be an internal long term trend line on the Dow Industrials that was broken in 2008 at the 9600 level. A steep sell off occurred after to the March ’09 low of 6670. The 10 1/2 month rebound retested this line now at the 10,400 level for this year. Having brief success pushing through this resistance in early January, the DOW has once again smashed through this line on increasing volume. An upward push to retest this resistance line (similar to the retest in October ’08) would be normal before the bear trend resumed.
Market commentary provided by Barry Ward, registered principal, NobleTrading.com, Inc.
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