Intraday Market Update
In the overnight session the S&P 500 futures traded in a 15 point range reaching a high of 1,061 which was +14 points off of Monday's close. However, the strength was quickly sold into and the futures bottomed at 1,046 in early pre-market trading before rebounding to open Tuesday's trading session at 1,050. The S&P 500 quickly gained +6 points at the open before the selling set in which sent the index down to 1,042 and its lowest level since its May 25th low just under 1,041. The S&P quickly rebounded gaining +15 points in about 30 minutes and reaching an intraday high just under 1,058. The index has pared most of those gains and is surging towards the lows of the day. The SPX and the DJIA are both performing better than the NASDAQ and RUT which are both down about -1.50%.
The line in the sand for the bulls to defend on the SPX is 1,040. If this support is broken there is a prior support/resistance area from August 2009 and October/November 2009 in the 1,025 to 1,030 area. There is not much more support below this level until 980. But for now 1,040 has held. If the bears make another run at 1,040 I suspect that it will not hold as triple bottoms are not very reliable patterns in my opinion.
The strongest performing sector today is the gold miners (GOX) which is not surprising since gold printed an all time high of 1,253.90 per ounce. The other sector performing is utilities (UTY). The weakest sectors include home construction (DJUSHB), biotechnology (BTK), and semiconductors (SOX). The overall reading on our core sector list is firmly in the bears favor with 14 sectors declining and 2 sectors advancing in early afternoon trading.
Federal Reserve Chairman Ben Bernanke spoke overnight expressing concerns about the slow decline in the US unemployment rate, but also warned that the FOMC cannot wait for unemployment to reach Fed targets before normalizing monetary policy. He also stated that he does not expect a double dip recession to hit the US economy. It amazes me how the mainstream media spins these headlines as positive news. Did we really expect our Fed Chairman to come out and say that he expects a double dip recession?
In equities, McDonalds reported May comps with same store sales up +4.8% for the month. MCD was down -1.4% but has since rebounded and is now higher by +1.4%. Discount retailer Dollar General beat earnings expectations in its Q1 earnings report and also raised its 2010 guidance. DG was up +3.7% but is now well off of its highs and is positive by about +1%. Apparel retailer Talbots (TLB) beat bottom line expectations before a special one-time charge of 50 cents per share for merger and restructuring costs. However, the firm's guidance for next quarter was soft which sent the stock down -12%. TLB has recovered and is now well off of its lows but still down -6.75%. Apple, which represents about 20% of the NASDAQ 100 (NDX or QQQQ) is leading the index lower this morning after its highly touted iPhone 4 release yesterday afternoon. AAPL is off just shy of -1%.
Rumors are flying around concerning the future of BP. The New York Times reported that some analysts are saying the company is beginning to look like a takeover target while legal experts see scenarios in which BP would file a prepackaged bankruptcy, separating the costs of the Gulf clean up efforts into a separate corporate entity. Nonetheless, BP stated it has captured about 43,000 barrels of oil over the past 4 days since capping the leaking well. The company also stated that it will make a $60 million payment to the State of Louisiana to begin covering the their emergency response to the spill and will also make five more $60 million payments over the coming weeks and months.
NOTE: The US Coast Guard is looking into reports of another leaking well in the Gulf belonging to Diamond Offshore. The leaking well is apparently is shallow water at a depth of about 500 feet. Shares of BP and DO both off by about -7%.
Commodities are mixed with most well off of their highs.
The Asia-Pacific markets were mixed to slightly positive with the biggest gains coming out of Australia tacking on +1.28%. Major European markets were all lower including Spain (-1.43%), France (-0.98%), London (-0.81%) and Germany (-0.62%)
Core Sector List:
Overall reading: 9 sectors declining, 7 sectors advancing.
Strongest Sectors: Gold Miners, Utilities
Weakest Sectors: Home Construction, Semiconductors, Biotechnology
S&P 500 - Daily and 30-minute Intraday Charts:
Dow Jones - Daily and 30-minute Intraday Charts:
NASDAQ - Daily and 30-minute Intraday Charts:
Russell 2000 - Daily and 30-minute Intraday Charts: