EmailS&P futures were up solidly an hour ahead of the open yesterday. They are up again today. That compels us to write, yet again, that an opening bounce is likely after yesterday's decline.
Yesterday, of course, negative news concerning Greece hit the wires and the market opened flat and ended lower. The early futures trading provided a false signal. That could easily be the case again today. That is not a forecast, just a recognition of the fragile nature of current market sentiment.
Greece dominates the news again, with talk of the banking system being weakened by capital flight. This is not surprising as some Greeks would prefer not to exchange euros for a devalued Drachma, should it come to that. Once confidence in a country has eroded to this degree, it is very hard to reverse.
April housing starts rose 2.6% to a 717,000 annual rate. There is a pulse, but the sector remains has been down so long that it is hard to remember that housing starts ran at about a an average 1.7 million annual rate in the decade before the decline began in 2006. Multi-year excesses require multi-year corrections.
April industrial production data will be released at 9:15 ET. An increase of 0.4% is expected. The growing industrial sector continues to provide solid support to the US economy. Fed FOMC minutes will be out at 2:00 ET.
Oil prices, which seemed to be stuck at $100 per barrel for months on end, have now dipped under $93. Gold, which was near $1900 an ounce last year summer, is now at $1541 an ounce, almost 20% off its high. The weakness in commodity prices presumably reflects concerns about global economic weakness, but also simply reflects some of the speculative premium coming off.
Deere had a very strong earnings report. The agricultural sector has been very strong the past few years. Target stock is up on a strong earnings report. JC Penney and Abercrombie & Fitch are lower after earnings reports.
The market has been down steadily through May and could be considered oversold. A strong bounce at some point is possible. Even if that were to occur, however, it wouldn't change the extremely cautious underlying tone.
Founder and Chairman, Briefing.com.
