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Bulls hopeful for continued rebound

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This morning's economic data has stock futures edging higher for the second straight session, giving bulls hope that stocks will rally for a second session.

The Labor Department reported that jobless claims for the week ending September 21 fell by 24,000 to 406,000, which was better than economist's forecast of 420,000. This had the four-week moving average of first-time jobless claims inching lower for the first time in seven weeks, dropping by 1,000 to 419,000. Meanwhile, continuing claims jumped by 89,000 to 3.68 million, the highest in two months, which had the four-week moving average for continuing claims for state jobless benefits continuing its climb, rising 29,500 to 3.58 million.

Other economic data had August durable goods orders falling - 0.6%, which was less than economist's forecast for a -2.4% decline. Non-defense capital goods orders, which are a proxy for business investment soared 12.5% in July and tacked on another 5.9% increase in August. Excluding the volatile aircraft component, the July/August increases were 7.0% and 0.6% and followed an alarming -6.3% decline in June. The trend in durable goods is still improving and was much better than feared after the big June decline, but economists say it is far too early to call for a rebound in investment and more likely becomes realistic to hope for stabilization.

Stock futures saw marginal gains from early morning levels as S&P futures (sp02z) currently trade up 6.4 points at 847.60. NASDAQ futures (nd02z) are higher by 13 points at 895.50 and Dow futures (dj02z) are up 68 points at 7,915.

Fair value for the S&P 500 today is $0.90. That price will not change during the session. HL Camp & Company has their computers set for program buying at $1.40 and set for selling at $-2.12. Fair value for the NASDAQ-100 today is $3.90.

Later this morning at 10:00 AM EST, traders will be watching for August new home sales to be reported. Economist's are forecasting 985,000, which would be lower than July's robust 1.02 million.

Jeff Bailey
Senior Market Technician
Option Investor


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