EmailThe S&P futures are trading 0.5% above fair value, leaving the cash market poised to start today's session on a higher note.
Per usual, Apple (AAPL) is helping to dictate sentiment in the early going. The embattled stock, hit by a Citigroup downgrade to Neutral from Buy, traded below $500 in premarket action before launching a recovery try that has helped boost the futures market.
The key thing to watch with the market right now, however, isn't how it opens but rather how it closes. Investor conviction has been lacking of late, which makes sense as we draw closer to the fiscal cliff deadline without a deal.
Over the weekend, House Speaker Boehner offered a new proposal that allowed for raising taxes on income over $1 million, contingent on the White House agreeing to big cuts in entitlement programs.
Reports indicate the White House has not accepted the proposal, yet the recognition that Mr. Boehner is offering a plan that raises taxes on the wealthy is being construed as a positive sign in the process of negotiation.
If nothing else, the market has not given up on the idea of a compromise being reached. That appears evident in the virtual non-response to the disappointing Empire Manufacturing Index for December.
The latter checked in at minus 8.1 versus the Briefing.com consensus estimate of 2.0 and the prior month's reading of minus 5.2.
The S&P futures actually nudged a little higher in the wake of the report, which didn't contain any mention of disruptions related to Hurricane Sandy. That is, it was simply a weak report in and of itself.
Other data to be released this week includes housing starts, initial claims, the third estimate for Q3 GDP, existing home sales, the Philadelphia Fed Index, leading indicators, personal income and spending, durable orders, and the final reading for the December University of Michigan Consumer Sentiment survey.
Elsewhere, Shinzo Abe is going to assume the role of prime minister of Japan again after his LDP party won a landslide victory in weekend elections. Mr. Abe wants the Bank of Japan to put its foot on the easing accelerator and not let up until deflation has been run over. That view has provided a huge boost to the Nikkei in recent weeks, with exporters leading the way.
While Mr. Abe's victory was expected, there wasn't a sell-the-news response in the Nikkei, which jumped 0.9% on Monday. Other Asian markets were mixed, which is pretty much how Europe is trading right now.
Apple for its part is back to $511, or up 0.3% from Friday's close, in premarket trading. That show of resilience is keeping things interesting for now in what is a quarterly options expiration week.
