Morning Watch, June 23
June 23, 2009
Futures point to a bounce this morning, though gains could be small compared with Monday's declines. The major market indices experienced their worst declines in two months yesterday with concerns about the economy resurfacing after the World Bank cut its forecast for the global economy. Volumes could be light today as traders await the FOMC statement Wednesday afternoon.
The auto sector is getting attention this morning with Ford (F) expected to take advantage of the government's loan program. Law makers tagged $25 billion in funds for the auto sector to help them retool factories to more advanced technologies. Shares of Ford are up 1.5 percent in premarket trading to a price close to $5.50. The stock has a 52-week range from $1.01 to $6.54.
Oil prices have returned to the forefront of late as the commodity moved above $70 this past week. Commodities gained ground with talk of green shoots in the economy. However, traders are starting to see that the global economy is not just going to suddenly show growth and this, along with the rising dollar, has put downward pressure on crude prices.
Less than two weeks ago, the Dow ($INDU) closed in positive territory for the year, but this was short lived. Since that time, the bears have taken charge of the stock market with traders taking profits from a three month run of strong gains. Where stocks head in the near term could be a direct result of what the FOMC has to say about the economy when they release their statement Wednesday afternoon.
Data on existing home sales will be released later this morning with estimates for a rise to 4.85 million annualized units, up from 4.68 million units in April. Though we have seen some improvement in existing home sales, the data still points to a log of weakness with supply above 10 months. Data on same-store sales is also on tap this morning with the ICSC-Goldman report showing improvement. Sales this past week were flat after a -0.6 percent decline in the prior week with year on year results showing a decline of 0.9 percent, 6-tenths better than the prior week's data.
The S&P 500 ($SPX) will be closely watched today with the index testing support at its 200-day moving average. The Dow broke below this level last week, although the Nasdaq ($COMPQ) remains safely above this key moving average.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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