The stock market is showing a slightly positive early tilt this morning and that is somewhat surprising given the weakness seen in the prior trading session. With the talking heads this morning carrying stories about the ultimate demise of certain US auto makers, one might have expected the macro economic condition to hang heavily on the market this morning. In fact, the press overnight is also trumpeting the latest cut in US auto sector debt ratings. In fact, with Toyota announcing its first ever US job cuts, one gets the impression that the travails of the auto sector are far from over. With a private retail sales survey suggesting that the latest weekend holiday sales were dismal, it would not seem like the market is in a position to get the typical pre-Christmas rally. In fact, given the pattern of lower highs seen since the December 17th high one has to give the edge to the bear camp in the action today. With the market also faced with a series of US housing sector readings, it would also seem like the market will be faced with bearish macro economic news at the start of the trading session today. However, this market doesn’t seem to be particularly anxiety ridden and that might reduce the magnitude of the early downside action.
DOW: With an established pattern of lower highs and lower lows on the Mini Dow chart over the last four trading sessions, we have to give a slight edge to the bear camp. In fact, with talk of poor weekend sales from the retailers, negative electronic games sales talk recently and fears of slowing expected to be fomented by the scheduled US data this morning, the market doesn’t seem to be in a position to get much of a lift from the recent news of Chinese interest rate cut. Critical consolidation support in the March Nasdaq is now seen down at 8,191.
NASDAQ: While European stocks showed some early strength today and the US stocks are initially higher, we have to wonder how the markets will absorb the scheduled US data flow early in the trading session today. Initial support in the March Nasdaq is pegged down at 1169 but a move to even lower support down at 1150 might have to wait until after the holidays, as the market sometimes tries to put on a positive track in the lead up to the holiday period and that could leave a hang over condition in place for the action on Friday.
S&P 500: The S&P remains in a downward bias on the charts, with a pattern of lower highs and lower lows seen since December 17th. Initial close-in support is pegged at 867.50 and then again down at 856.50 but we suspect that the market will attempt at least some form of pre-Christmas rally attempt in the next 36 hours of trade. Therefore, aggressive and short term traders might look to a post scheduled report dip this morning.