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Global equity markets are higher to start this morning, helped by favorable corporate earnings and a net positive result in global economic data overnight that overshadowed tensions in Egypt. The improving economic data trend was complimented by Germany’s Unemployment Rate that reached the lowest level in 19 years, with a January reading of 7.4%. The favorable data seemed to bolster hopes of a further rebound in consumer spending ahead and that helped to lift shares of the DAX. While Euro zone unemployment also ticked lower in January, it remained at elevated levels of 10.0%. UK Manufacturing PMI data surged in January at the fastest clip on record and that was accompanied with a boost in factory input prices, which is likely to put more pressure on the Bank of England to boost short-term interest rates. Meanwhile, China’s January PMI reached a new five-month low on reduced factory output and higher input prices that are being passed on down to consumers. A global bank report earlier this morning estimated that Chinese inflation would average around 5% during 2011. The net result appears to be ideas that recent tightening measures have begun to restrain growth, but that does not appear to be a limiting factor this morning. Egypt unrest could expand However, the Egyptian military has agreed to avoid heavy handed action with the protestors and that could be a sign of compromise. US economic data today includes January Vehicle Sales data that is expected to decline from December’s pace, December Construction Spending that is expected to be flat on the month and January Manufacturing PMI. Earnings this morning in the US include Pfizer, which is expected to show cost-cutting, ADM and United Parcel Service after the close.
S&P 500: The March S&P 500 continued to extend gains from Monday’s positive reversal and it has worked its way back toward last week’s high of 1299.50. While BP reported earnings this morning that fell short of expectations, they did reinstitute their quarterly dividend, which seemed to limit the downside action this morning. It is also possible that the S&P 500 has factored in positive results from UPS this afternoon, that are expected to report a 40% increase in quarterly profits, supported by a jump in consumer spending. These results are also expected to be watched closely, as an economic indicator as the company represents freight transports to the tune of 6.0% of US GDP. Near term targeting for the S&P 500 comes in at 1292.00.
DOW: The March E-mini Dow Jones Index is off to a positive start this morning and sits under 100 points away from new contract highs. It appeared that blow out earnings from ExxonMobil during the previous session that showed a surge in quarterly profits of over 50% served to bolster the index higher. While there was disappointing news from Intel Monday, that highlighted a design error with one of their chips that news seems to be at least partially countervailed by positive tech news elsewhere. Looking ahead, the market will be on the watch for results from Pfizer this morning that are expected to reveal a boost in bottom line results after recent cost cutting measures. Next upside targeting for the March E-mini Dow comes in at 11,920.
NASDAQ: Shares of the March NASDAQ are also higher to start this morning and appeared to be drafting off of positive tech earnings earlier from Infineon. The company raised their full-year outlook and anticipates stronger industrial demand ahead. Perhaps the NASDAQ drafted some support from strong earnings data from Baidu after yesterday’s close, that sent its shares nearly 8% higher in overnight action. This should be supportive for the tech sector as it has large fund interest and represents the key player within the Chinese Internet market. The March NASDAQ has a key upside pivot level at 2300.00 that is likely to challenge the bulls resolve this morning.
TODAY’S MARKET IDEAS: US equity markets continue to build on Monday’s bullish reversal and seemed to embrace net positive economic data this morning and somewhat favorable corporate results. The major US indices have rebounded from Friday’s downdraft and have now worked their way back toward last week’s high area, which should provide a key test for the bull camp today. While both economic and corporate data continue to foster higher pricing, there remains concern that the market has become overbought, with over 80% of the S&P 500 trading above their 200 day moving average. The last time this happened was during April of 2010 that led to a 10% plus correction. The bulls have the early edge with key challenge area at 1292.00 for the S&P 500 and 11,920 for the March E-mini Dow.
Equities: Bulls Have the Early Edge; Overbought?
by Dave Hightower on February 1, 2011
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
Global equity markets are higher to start this morning, helped by favorable corporate earnings and a net positive result in global economic data overnight that overshadowed tensions in Egypt. The improving economic data trend was complimented by Germany’s Unemployment Rate that reached the lowest level in 19 years, with a January reading of 7.4%. The favorable data seemed to bolster hopes of a further rebound in consumer spending ahead and that helped to lift shares of the DAX. While Euro zone unemployment also ticked lower in January, it remained at elevated levels of 10.0%. UK Manufacturing PMI data surged in January at the fastest clip on record and that was accompanied with a boost in factory input prices, which is likely to put more pressure on the Bank of England to boost short-term interest rates. Meanwhile, China’s January PMI reached a new five-month low on reduced factory output and higher input prices that are being passed on down to consumers. A global bank report earlier this morning estimated that Chinese inflation would average around 5% during 2011. The net result appears to be ideas that recent tightening measures have begun to restrain growth, but that does not appear to be a limiting factor this morning. Egypt unrest could expand However, the Egyptian military has agreed to avoid heavy handed action with the protestors and that could be a sign of compromise. US economic data today includes January Vehicle Sales data that is expected to decline from December’s pace, December Construction Spending that is expected to be flat on the month and January Manufacturing PMI. Earnings this morning in the US include Pfizer, which is expected to show cost-cutting, ADM and United Parcel Service after the close.
S&P 500: The March S&P 500 continued to extend gains from Monday’s positive reversal and it has worked its way back toward last week’s high of 1299.50. While BP reported earnings this morning that fell short of expectations, they did reinstitute their quarterly dividend, which seemed to limit the downside action this morning. It is also possible that the S&P 500 has factored in positive results from UPS this afternoon, that are expected to report a 40% increase in quarterly profits, supported by a jump in consumer spending. These results are also expected to be watched closely, as an economic indicator as the company represents freight transports to the tune of 6.0% of US GDP. Near term targeting for the S&P 500 comes in at 1292.00.
DOW: The March E-mini Dow Jones Index is off to a positive start this morning and sits under 100 points away from new contract highs. It appeared that blow out earnings from ExxonMobil during the previous session that showed a surge in quarterly profits of over 50% served to bolster the index higher. While there was disappointing news from Intel Monday, that highlighted a design error with one of their chips that news seems to be at least partially countervailed by positive tech news elsewhere. Looking ahead, the market will be on the watch for results from Pfizer this morning that are expected to reveal a boost in bottom line results after recent cost cutting measures. Next upside targeting for the March E-mini Dow comes in at 11,920.
NASDAQ: Shares of the March NASDAQ are also higher to start this morning and appeared to be drafting off of positive tech earnings earlier from Infineon. The company raised their full-year outlook and anticipates stronger industrial demand ahead. Perhaps the NASDAQ drafted some support from strong earnings data from Baidu after yesterday’s close, that sent its shares nearly 8% higher in overnight action. This should be supportive for the tech sector as it has large fund interest and represents the key player within the Chinese Internet market. The March NASDAQ has a key upside pivot level at 2300.00 that is likely to challenge the bulls resolve this morning.
TODAY’S MARKET IDEAS: US equity markets continue to build on Monday’s bullish reversal and seemed to embrace net positive economic data this morning and somewhat favorable corporate results. The major US indices have rebounded from Friday’s downdraft and have now worked their way back toward last week’s high area, which should provide a key test for the bull camp today. While both economic and corporate data continue to foster higher pricing, there remains concern that the market has become overbought, with over 80% of the S&P 500 trading above their 200 day moving average. The last time this happened was during April of 2010 that led to a 10% plus correction. The bulls have the early edge with key challenge area at 1292.00 for the S&P 500 and 11,920 for the March E-mini Dow.
Tags: DOW, Equities, Financials, NASDAQ, S&P500, Stocks
About Dave Hightower