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The stock markets have followed through on the downside thrust seen into the Thanksgiving holiday. However, with the Dubai debt standstill rekindling fears of global financial sector troubles again, the health of the global economy is somewhat given a back seat. While Dubai world is a private company, it is owned by the Dubai government and therefore the debt standstill is seen as a very troublesome situation. Many traders are fearful that the losses in Dubai will have an echo impact on other funds and banks and therefore anxiety is running somewhat high in the early action today. With the market fresh off a distinct failure on Wednesday, the downside extension in prices this morning is probably kicking off some classic technical stop loss selling pressure. While the UK equity market was trying to throw off the negative impact from the Dubai situation early today, the markets were also confronted with a slight worsening of Euro zone Consumer Confidence. While the stock market has shown pre-holiday and Black Friday strength in the past, we have to think that outside market influences are destined to overshadow positive thinking today.
S&P 500: The December S&P comes into the Friday morning action under noted pressure this morning, but at this hour the S&P was able to bounce rather impressively from the initial lows. Up trend channel support in the December S&P is seen at 1062 and it could take a rise back above the 1083.70 level to fully shake off the negative tilt in place this morning. While the net debt at risk is supposedly pegged at only 16 billion in the Dubai situation, there is no guarantee that the debt issue in Dubai won’t chain reaction into other entities. While the market might attempt to regain the early losses, we are not sure that the anxiety can be quickly erased from the markets mentality.
DOW: While the December Mini Dow did see a sharp downside extension early this morning, (as of this writing) the December contract was as much as 112 points off the initial low. Nonetheless the Dow looks to start the session out 23 points lower and 264 points below the November high. While the December Mini Dow might be able to respect close-in support of 10,158, the path of least resistance might remain down, unless the market can muster enough positive anecdotal Black Friday sales data, to reverse negative sentiment. We would also expect a large portion of the volume to be seen in the morning action, as the trade tends to thin out well ahead of an early closure.
NASDAQ: While the December Nasdaq saw a sharp downside follow through in the early action today, it has also managed to throw off a large measure of that sell off attempt. In fact, it would seem as if the December Nasdaq has found solid support at the 1750 level and that level might be able to hold if the trade can place a net exposure on the Dubai debt situation and return its attention back to the recovery question. In order to throw off a large portion of the bearishness facing the trade this morning, probably requires an early morning rise back above the 1755.75 level.
TODAY’S MARKET IDEAS: The path of least resistance is pointing down, with the Dubai situation merely adding into the pre-existing negative bias from early in the week.
