Tom,
This is a good overall read on the market. I get it from:
crbindex.com
........and then click on the review button to get to the various market commentaries. This one is specifically the equities review. Here is the direct link.
crbindex.com
-scott
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Updated Fri Jan 28 16:50 ET
US Equities Futures Review: Depressing week ends in the red
By Kristina Zurla, Bridge News
Chicago--Jan 28--Stock index futures ended a depressing week on a sour note,
with robust US economic data setting the tone for a day in the red. Mar Nasdaq
futures were hardest hit, sliding 4.4% and ending with a triple-digit point
loss. For the week, Mar S&P 500 futures were down 6.0%, Mar Nasdaq down 10.7%
and Mar futures on the Dow down 4.9%.
* * *
Early morning economic data brought out the bears. Fourth-quarter US gross
domestic product growth came in at 5.8%, too strong for bullish comfort, and the
employment cost index came in at 1.1%. (Stories .4739, .4730) The data had
market players speculating that not only was a Federal Reserve interest rate
rise a done deal next week, but an increase of 50 basis points was a strong
possibility.
A Bridge poll of 23 economists put the odds at more than 80% that the Fed
would raise interest rates by 25 basis points, while the odds of a
50-basis-point increase were put at 28%, up from 20% in the poll taken Jan 7.
(Story .1020)
There were small signs of life from the bulls early but rally attempts were
quickly squashed. Mar Nasdaq futures led the way south, triggering 2 downside
limits. Mar S&P 500 sank through its first limit and took out the prior 2000
low, sliding to 1374.80, a 3-month low.
Traders said there was a "lot of speed" during the heart of the selling
spree, with the only buying interest stemming from limite
d short-covering squalls from locals looking to quickly take profits.
Traders were not particularly optimistic about the market's prospects for
Monday, a day before the Federal Open Market Committee meeting; some were even
harking back to the infamous black Monday market crash of 1987.
But bulls were betting on a big short squeeze, saying the market was
overreacting and oversold, with earnings and the economy still sound and not
warranting such panic.
TECHNICALS
Friday's sharp decline provided a powerful argument for the market to enter
another prolonged correction. Mar S&P 500 futures tested the old trendline from
the October lows, then collapsed to close below former support from the January
low (which also was near the 200-day moving average). That old low at 1387.00
now becomes important resistance because the trendline has been obliterated.
Mar also closed below the 50% retracement of the October-January rally, a
line that really should have held for the intermediate bull market outlook to
remain in place.
Some of the bearish patterns that were touched on earlier this week, such as
the rounded top on daily charts and the ominous bearish key reversal on weekly
charts, provide a stark reminder that the market carries considerable downside
risk.
Click below for S&P500futures chart in analytics
Media://Analytics/Pages:S&P500futures:/cmd=us@sp.1/CH/MA/HZ2/NVO
OPTIONS
At the CBOE's SPX, Ernst bought 2,000 Mar 975/1025 put spreads at 0.5, while
Goldman bought 3,000 Feb 1275 puts at 6.50. In the OEX, Mesirow bought 1,400 Feb
770 calls at 7 5/8.
Volatilities in the at-the-money straddles were estimated as follows:
Contract Volatility
Feb 22.33%
Mar 22.01%
Apr 21.74%
Jun 22.36%
CASH
The Dow closed down 289.15, or 2.6%, at 10,738.87; the Nasdaq composite
posted its second largest point decline ever, down 152.50, or 3.8%, at 3887.06;
and the S&P 500 index closed down 38.41, or 2.8%, at 1360.15.
Market breadth was negative on the NYSE as decliners topped advancers 2,034
to 1,001 on volume of more than 1 billion shares.
Drug stocks were leaders on the Dow, with Johnson & Johnson (JNJ) up 4 at
84 1/2 and Merck (MRK) up 2 1/4 at 76 3/8. Analysts said the sector rose on
relief President Bill Clinton did not slam the industry and introduce price
controls in his State of the Union address Thursday night. The AMEX
Pharmaceutical Index rose 1.7%. But it was mainly gloom and doom on Wall Street.
Technology stocks were hard hit. Amazon.com (AMZN) was a big drag on the
Nasdaq, sinking 5 1/4 to 61 11/16 after CNBC reported that the firm would cut
150 positions, or 2%, of its workforce.
On the flip side, Ericsson (ERICY) was a bright spot on the Nasdaq, jumping
4 7/16 to 70 1/16 after reporting that net income for the fourth quarter came in
at 6.32 billion Swedish krona, or about $731 million, exceeding the estimated
5.3 billion, or roughly $613 million.
Among the biggest gainers in the market, shares of 724 Solutions Inc. (SVNX)
surged 45 13/16 to 71 13/16 in its market debut. The Toronto-based company
licenses software to financial companies, enabling them to offer services
through hand-held devices.
SETTLEMENTS
estimated previous
Close change volume volume
Mar contracts
CME S&P 500 1366.50 - 43.30 108,000 92,062
CME Nasdaq 100 3475.00 -161.00 20,000 19,525
CME S&P MidCap 433.00 - 11.45 850 691
CME Russell 2000 505.00 - 16.50 980 749
CBT DJIA 10,779 -338.00 21,000 15,138
End
[symbols:US;XXX:US;MRK:US;JNJ:US;SVNX:US;AMZN:US;ERICY] |
