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Oversold bounce in the making

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Stocks look to shrug off what has been a 5-session slide, which has erased the bulk of January's gains as S&P futures (sp03h) trade higher by 6.7 points at 884.20, NASDAQ futures (nd03h) gain 19 points at 1,023.50 and Dow futures (dj03h) rise 50 points to 8,350.

Stock futures began their rise late yesterday afternoon when Texas Instruments (NYSE:TXN) $14.25 said reported Q4 earnings of $0.06 per share, which beat analyst's estimates by 3 cents a share. Shares of TXN currently trade at $15.75, up 10.5% from yesterday's close, after the company gave upcoming Q1 guidance of "$0.06, plus or minus a few cents" per share guidance, which may be (plus or minus a few cents) above current consensus estimates of $0.03 per share.

Economic data released this morning has had little impact on the equity futures. The Labor Department reported that weekly jobless claims rose by 18,000 to 381,000, which was very close to economist's forecast for weekly jobless claims to rise by 20,000. The previous week's jobless claims numbers were revised upward by 3,000 to 363,000. The weekly jobless claims number has the four- week moving average falling by 2,000 to 386,500, which is the lowest since November 2002.

The number of Americans who continue to collect benefits rose by 87,000 to 3.41 million, while the four-week moving average of continuous claims fell to 3.38 million, the lowest since October 6, 2001.

Handset maker Nokia (NYSE:NOK) $14.92 helped bolster European markets and lends to this morning's pre-market bullishness for technology stocks after saying it is sticking to its expectations for 10% or more growth in handsets for 2003, even as it issued a subdued outlook for earnings and sales in its upcoming first quarter. Shares of NOK rose as high as $15.44 over the New York ECN, but have settled back to $15.15.

Handset technology provider Qualcomm (NASDAQ:QCOM) $36.69 is seeing its shares jump to $38.80, or 5.75% after beating estimates by $0.04 per share and guiding upcoming Q2 and full year financials above consensus. Last night the company reported Q1 (December) earnings of $0.42 per share on revenues that rose 54.2% year-over-year to $1.07 billion. For Q2 the company said it sees EPS of $0.34-$0.35, which was above consensus for $0.30 per share. QCOM also said it projects 2003 earnings per share of $1.34-$1.39, which was also above consensus of $1.24 per share.

Bullish % updates from yesterday's action has seen reversals to the downside in the NASDAQ-100 Bullish % ($BPNDX) to 59%, which has this market back into "bull correction" status and very close to the 58% reading which would turn the NASDAQ-100 Bullish % to "bear confirmed" status. Also reversing back into a column of "O" is the very narrow Dow Industrials Bullish % ($BPINDU) which reversed to "bull correction" status at 53.33%. A further decline to 48% or lower would have the Dow's bullish % also reaching "bear confirmed" status. Both of these narrower bullish % chart reversals alert traders and investors to internal weakness as supply looks to be outstripping demand in the equity markets. Under these type of conditions, bullish traders and investors often turn to the options markets and write covered calls or develop protective put strategies to hedge positions where deemed necessary.

All of the above has futures well above fair value and has traders looking at a higher open. Fair value for the S&P 500 today is $0.16. That price will not change during the day. HL Camp & Company has their computers set for program buying at $0.20 and set for program selling at $-2.36.

Jeff Bailey

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