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Overseas markets have U.S. futures lower

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Overseas markets have had or are having a rough time and that trading has stock futures here in the U.S. looking lower. Asian and European markets are trading lower on fears that America's focus on retaliating for last week's attacks on the World Trade Centery and the Pentagon, will draw attention away from the slowing global economy.

Losses in overnight trading in Asia were not substantial, but in Hong Kong the Hang Seng fell 2.5% to 9,317, Japan's Nikkei 255 fell 1.5% to 9,785 and Taiwan's Taiwan Weighted fell 2% to 3,698. In Europe, France's CAC 40 is down 3.5% to 3,753, Germany's DAX is down 3.5% to 3,898, Switzerland's Swiss Market is lower by 3.5% to 5,450 and the UK's FTSE 100 is down 3.2% to 4,566.

All of the above looks to be having U.S futures indicating a lower open as we're looking at S&P futures (sp01z) down 17.6 points to 999, NASDAQ futures (nd01z) are down 26 points to 1,182 and Dow futures are off 123 points to 8,610.

Bond YIELDS are mixed, but for the most part, we continue to see the bulk of the buying in the shorter-end maturities as investors move cash into the perceived safety of the shorter maturities. The 13-week Treasury Bill (IRX.X) currently YIELDS 2.14% (was YIELDING 3.18% before attacks on the US) and the 5-year YIELD is currently at 3.759% (4.318% prior to attacks).

Yesterday's late session rebound

In last night's market wrap on PremierInvestor.com we went into great detail on how we felt that yesterday's late rally was probably a case of short covering than anything. The Dow Industrials had just tested our "fitted" retracement level at the 38.2% level of 8,481, when buying came into stocks, and this morning, that looks to be a level that traders need to keep an eye on.

Dow Industrials Chart - last ten months

The reason we believe yesterday's late session recovery was short covering was that the bond market and foreign currency markets were relatively calm prior to the move, and had actually been closed for 1-hour (bond and currency markets close 1-hour before stock market) during the move higher in stocks.

Jeff Bailey
Senior Market Technician

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