While the headlines suggest that the Obama Administration has reconstituted the composition of the stimulus package in an effort to gain passage, the fact that the package might have been reduced in size, could take some of the optimism out of the equation. With some disappointing earnings seen from BP seen overnight and a series of cyclical and consumer product companies also reporting earnings later today, there will be no shortage of market moving news to digest. However, while the market might be cheered initially by the Pending home sales figures, (which might yield a very minor bounce) the overall outlook for the stock market remains suspect. In fact, US auto makers will release January auto sales figures later today and those readings probably won’t be helpful to the bull camp. In the end, the question will be whether the latest stimulus offering is seen as an effective or passable offering, as the flow of corporate earnings news, auto sales data and other macro economic information still look to favor the bear camp. On the other hand, after three days down on the charts, even the slightest progress on the stimulus effort might be cause for a bit of a weak bounce. However, the market doesn’t have far to run unless the composition of the new stimulus plan is innovative, bold and lauded by both sides of the isle and by noted market economists.
S&P 500: The bulls will point to the fact that the March S&P did manage to recoil away from the 800 level yesterday. While the bear camp will point to a pattern of lower highs on the charts over the last several trading sessions. We would suggest that the market has a significant amount of overhead resistance on the charts but we also wouldn’t rule out the prospect of a bounce later today off an aggressive push forward on the stimulus package.
DOW: The March Mini Dow remains off balance and seemingly poised to fall to an even lower trading range ahead. In fact, with market favor clearly settling on the tech sector, the blue chip sector of the market was somewhat forgotten yesterday. In fact, with the Mini Dow and the Dow Jones Industrial average falling below and staying below the 8,000 level overnight it is clear that the top end of the market remains concerned about sustained slowing, perhaps regardless of the “hope” for an impending stimulus plan passage. Critical resistance is seen at 7,872 and the market might remain below that level today unless there is a distinct improvement in the headline flow.
NASDAQ: The headlines are ringing with the fact that the Nasdaq out performed the rest of the market in the prior trading session. Apparently the trade sees the Nasdaq or mostly the tech sector, as an area of the market that is most likely able to dodge the brunt of the slowing impact. In fact, the March Nasdaq seems to have maintained a pattern of higher lows on the charts and that could make the 1157.80 level an extremely critical support point in the coming trading sessions.