Earnings season comes into full swing this week and early results from Dow component Citigroup (NYSE:C) $37.35 that it earned $0.79 per share, which was 2 cents better than consensus on revenues that rose 4.1% year-over-year to $18.54 billion has helped give stock futures a modest lift ahead of today's open for stocks. Shares of Citigroup rose to $37.90 over the New York ECNs.
S&P futures (sp03m) currently show a gain of 3.6 points at 871.80, while NASDAQ futures (nd03m) are gaining 3 points to 1,031.50 and Dow futures gain 37 points to 8,215.
Fair value for the S&P 500 today is $-0.76. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.45 and set for program selling at $-2.02.
Treasuries are seeing modest selling this morning across the major maturities, but off their morning lows. The 10-year Treasury June futures contract (ty03m) $114'015 -0.06% if lower by 3/32 with the benchmark bond's YIELD ($TYX.X) edging up at 3.989%.
Economic data released this morning had the Commerce Department reporting that stockpiles at U.S. businesses expanded a larger- than-expected 0.6% in February. The increase topped expectations for a 0.4% rise.
January inventories were revised to show a 0.3% gain, up from the 0.2% rise first reported.
This week, the Federal Reserve banks of New York and Philadelphia will give the first reports on April manufacturing activity. The surveys of factory operators across their regions mimic the private-sector purchasing manager surveys.
Most economists believe the Empire State Survey and the Philly Fed index will improve slightly from depressed levels in March.
I really enjoyed writing this weekends "Ask the Analyst" column regarding May Fed Funds futures and it was interesting to "benchmark" some dates in the Fed Funds chart with different events and news (both economic and war related) to how the MARKET dealt with the news and thoughts of Fed policy at the upcoming May 6 meeting. It was also interesting to may some ties to the S&P 500 Index (SPX.X) 868.30 and perhaps carry over some of those observations into the SPX chart, with this WEEK's pivot analysis retracement overlaid.
S&P 500 Index Chart - Daily Interval
On Thursday, the SPX found support near the 861 level, and I liked the selling I saw in Treasuries on Friday, which I believe came from the stronger than forecasts March retail sales data and not necessarily from the PPI data, which showed an increase in prices paid at the manufacturing level. This had me profiling a bullish trade in the QQQ from $25.52 as it was near a "zone of support" we had been discussing in Thursday's Index Trader Wrap.
I did want to take a look at the SPX chart this morning (I'm writing this on Saturday so I don't know what stock futures or Treasuries are doing Monday morning).
As I have new WEEKLY levels and retracement to work with, I suddenly see how the 887-883 are looks to be a "zone of resistance" right now, which amazingly, the MARKET has really been willing to sell some of the recent two-week rallies right back down into by their close (especially Monday!). This constant "selling" back into this zone is definitely defensive and most likely has some "old bulls" December and January that didn't like what they saw/experienced in March, now selling at break-even or smaller losses and creates some significant overhead supply of stock that the SPX has been trying to take a bite out of in recent weeks above the 888 level.
Maybe it seems like I'm making this up, but after I wrote the "Ask the Analyst" column, I thought I'd look back and see if the December 17th trade observation from the May Fed Funds Futures was a "level" that showed up in the SPX as being technically significant, and was a bit "surprised" to see how Monday's extreme spike higher, not only fits in very nicely with this WEEK's pivot retracement (it should as last week's high is part of the formula for calculating the levels).
With the S&P 500 Bullish % ($BPSPX) still "bull confirmed" and seeing some selling from Treasuries on Friday (just enough to keep me bullish for equities) I'm going to maintain a bullish stance on the indexes, but I'm going to want to see and SPX hold Thursday's lows of 862 and for more "risk averse" bulls, Friday's lows, with an upside test being an SPX close above the "zone of resistance" of 883.
We can see how Friday's high in the SPX came almost "smack dab" at the conventional (pink) 38.2% retracement (it actually traded there for 15-minutes) and when it fell back below this WEEKs 878.60 Pivot, really got hit lower an then traded either side of 868.72 as if this level was a "gravitational" point into the weekend.
For downside... I'm looking at our old downward trend, which has been broken to the upside a couple of weeks ago, currently crossing this WEEK's S1 from the pivot matrix.
I'm not sure I'd classify myself as "risk averse", but as a bull in the SPX (I'm not holding a position, but imagine that I am) it doesn't make much sense to me to hold a bullish trade if Friday's lows are violated by more than 1 or 2 SPX points as risk assessment quickly becomes Thursday's lows 862, then 861 (50% conventional retracement) and finally WEEKLY S1 of 853, which is very correlative 80.9% WEEKLY retracement, and "old downward" trend.