Futures are up, and the European markets have recovered somewhat as Greek fears have subdued a bit. Stocks have a chance to get on the move this week if Europe manages to stay out of the headlines and a cluster of US economic data on Thursday and Friday hit the newswires.
The S&P, NASDAQ, and Dow are trading in the middle of support and resistance levels. To the topside, the NASDAQ will fight with 2900ish, the Dow in the neighborhood of 12,700, and the S&P could find a flexible cap around 1340.
The trio of indexes should move no lower than their 200-day averages of 2751, 12,233, and 1282 for the NASDAQ, Dow, and S&P 500, respectively.
All of Top Equity News’ market models showed some improvement, moving from three sell signals to a hold, a buy, and a sell, which translates to a neutral reading with a slight upward bias in the short-term. However, TEN would expect that volatility, sudden swings in either direction could be the norm for a while.
For a rally to have legs, Thursday’s revised GDP and Jobless claims results with have to be solid, and their performance followed up by strong results from three BIG reports on Friday: Personal Income and Outlays, ISM Manufacturing Index, and the Rose Bowl of economic news, the Employment Situation.
Additionally, while Greece has been the thorn in the side of Wall Street, Spain’s situation has deteriorated much more quickly and worse than most realize. Unlike Greece, Spain is too big to bail. Also, France has its own sets of worries as one of their major mortgage companies may well be pulling off a Freddie Mac and headed for a meltdown – stay tuned.
In the meantime, France and Germany are sparring over Eurobonds and spending versus austerity. Germany’s constitution prohibits Eurobonds but can support project bonds, essentially what we call municipal bonds.
Overall, stocks are likely to be held hostage by the ebb and flow of European and economic headlines at home. At the moment, sentiment has shifted back to everything is going to be OK. It won’t be long, however, before a bad economic report or some Euro tussle, i.e. the Greek elections in June, or a series of credit downgrades bring doubts and sellers back to center stage.
Wash, rinse and repeat until we hit the debt ceiling debate and the full swing of the election by September/October. Buckle up, the rise is likely to be choppy.
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