The performance in the stock market in the face of the swine flu situation is rather impressive, as many market measures were able to respect up trend channel support, despite some rather disconcerting economic fears. In fact, given the wholesale washout in a host of travel, leisure and cyclical stocks this week, the overall broad measures of stock prices have still managed to find support from other sectors. In fact, the market even seemed to garner some support from news that US home price declines seemed to be slowing their rate of deterioration. While some players might suggest that the market is failing to register the damage already being seen off the swine flu situation, we would suggest that the markets resilience is a telling sign of which way the market wants to head and that without a sustained swine flu drag, prices are likely to claw their way higher again. However, the rate of expansion in swine flu is still a major hurdle for the markets, but without some deaths in the US or a quickening of the number of fresh cases of swine flu, we think that the 850 level in the S&P and the 8,000 level in Dow will continue to be fairly important support.
S&P 500: Initial resistance in the June S&P is seen at 865.50 today and then again up at 868.50 in the event that the market sees anything favorable from the US GDP report or from the swine flu front. Up trend channel support in the June S&P is seen at 842.10 today and then again at 845.35 on Thursday. The bulls have the edge but that edge doesn’t look to be definitive.
DOW: In addition to shaking off the initial swine flu threat, the Mini Dow with a minor pulse up move today could find itself within striking distance of the April highs. Certainly seeing IBM raise its dividend and seeing other blue chip stocks consider raising their dividends is a confidence builder and to a degree that serves to countervail the recent capital problems at Citi and Bank of America. However, as one analyst noted this morning, at least one major financial company went to the market to raise capital recently and that offering was met with strong demand. Without a fresh and damaging shift in the swine flu situation, the path of least resistance in the Mini Dow looks to be pointing upward today, with initial resistance today pegged at 8,082 and then again up at 8,119.
NASDAQ: The June Nasdaq continues to respect up trend channel support on the charts, despite all the potentially devastating threats surfacing this week. In fact, the June Nasdaq seems to be poised to retest the April highs of 1384, which in turn are the highest levels since November 4th. Apparently tech sector stocks look to remain in favor, regardless of the broad based slowing threats that have surfaced in earnest again this week. Up trend channel support is now seen at 1352.80 today and then again up at 1361.50 on Thursday.
TODAY’S MARKET IDEAS: The bulls hope for a lull in fresh swine flu news and perhaps some players were hoping for something positive from the US FOMC statement later in the trading session.