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EARLY TRADE

Yields aren’t yielding, but the bulls are content to nibble on equities after back-to-back days of panic-style selling leave some age old adages looking smart after all. As of 10:45 ET the S&P500 ($SPX) and NASDAQ Composite ($COMPQ) are up .30% to .55% on lighter cleansing of fresh wounds.

With a quick and hard retest of May 1^st lows, many investors are likely wishing they took heed of selling in May rather than participating in the current bout of June Gloom. In Friday’s first-half, though, the bulls are receiving a very slight reprieve after two days of aggressive selling sent technical bells and whistles into extreme short-term oversold territories and the major averages into technical levels of notice. With that being said, if it’s a change in sentiment or soothing sound bytes which investors are looking to confirm their bargain-hunting efforts, the plate is an empty one in Friday’s session.  

For the bulls, in fact the most recent catalysts have only added to the quick and rapid deterioration of investor sentiment and newly anointed bearish view on the market. Namely, the drumbeat of the interest rate picture becoming a very real detriment to the recently unyielding and promising bull market continues to manifest itself with investors. Front and center, in late trade on Thursday a report that PIMCO’s famous Bond Bull, Bill Gross, sent investors running. News of the much revered fund manager retiring his horns and turning bearish after twenty-five years reversed the broader indices back into session lows, as another piece of anecdotal evidence to support a more difficult market environment was offered.

In Friday’s trade, the bad news has lessened, but isn’t exactly prompting investors to pop the champagne just yet. For its part, the bond market is still weighing in heavily with Wall Street. Yields on the 10-Year spiked over 5.25% intraday and remain above last night’s levels at 5.16%. In related markets, the greenback is continuing to gain traction [two-month highs] due to higher rates and possibly some flight-to-quality. At the same time Comex Gold (GLD) is continuing its slide to fresh two and one-half month lows as the dollar-denominated contract becomes less attractive to foreign investment. GLD is down 1.15 at 64.10 after testing its 200-Day EMA.

In other markets, the equity bulls are finding a slight, but double-pronged reprieve from the July crude contract. The commodity is off -1.10 at 65.31, but still slightly above last week’s closing levels. Catalysts cited by analysts for Friday’s decliner include Cyclone Gonu finally losing strength. However, a potential shift by traders that’s pricing in higher rates and slower economic growth, which could ultimately dampen demand for energy, might be viewed as something other than bullish for equities.

Elsewhere, fresh comments by Chicago Fed Prez’ Moskow are sending a mixed message to the market. In a CNBC exclusive, inflation expectations were cited as being “well contained” and stronger economic growth looked promising. Unfortunately, the message of inflation still being the Fed’s primary concern and that rising labor costs and slowing productivity needed to be appreciated, aren’t comments being cheered by market bulls. Separately, a premarket release of the US trade deficit is delivering a little something to both bears and bulls. The report showed a better-than-expected decline with a figure of -$58.5B versus analyst estimates of -$62.4B. That’s good news for investors and bullish for bonds. However, a widening deficit with China is an area of weakness that might wind up being a concern for investors.

On the corporate front, it’s a very light news day with just one market-mover of notice. Thankfully for the bulls, the news is delivering a much needed lift spearheaded by the semiconductor sector (SMH). National Semi (NSM) delivered its quarterly results last night and blasted past analyst top and bottom line estimates. The company showed earnings that beat the Street by five-cents with 28 cents a share on a higher-than-expected 5.8% sequential sales increase. With the semis being one of the market’s leading laggards of late, investors are showing their appreciation for the report. NSM is up nearly 13% at 29.10 after catapulting through its year-to-date highs, while the SMH is tacking on 2.07%.  

GROWTH & MOVERS COVERAGE

EARNINGS CALENDAR

Select reports scheduled after the market close or premarket:

REPORT CALENDAR

Economic releases on tap:

INDICES & MARKET MOOD

Did readers happen to catch Cramer’s Mad Money Thursday night? Bar none, it was truly great television brought to us from a truly great thespian. To watch Cramer almost comically feigning fresh insight out of COO testimony and with associated fundamentals in hand (very unlikely): NYSE Euronext’s (NYX) most recent venture into the Mad Money spotlight, was an Emmy-winning moment for Cramer in 2007.

Elsewhere in the not-so-mad markets, it should be noted that Friday’s bargain-hunting isn’t without merit on a technical / sentiment basis. It can certainly be appreciated, as written in-depth about in this morning’s Growth Stock report. However, as important and also emphasized, to be the first to chase a corrective move which may or may not be a bottom of significance, isn’t an option worth holding onto with anything other than the shortest of leashes. 

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
 
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.

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