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Morning Watch, Nov. 9


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Jody Osborne, Optionetics.com
November 9, 2009


Futures point to further gains following bullish news out of the Group of 20 meeting. Last week, the major market indices saw gains of more than three percent. This occurred despite the fact the employment report for October was worse than expected. Economic news this week will be light, so it will be interesting to see if traders buy on the lack of news or if the lull will result in sideways trading or even profit taking.

The Group of 20 met over the weekend and stated that they will keep stimulus in place until the global economy is assured. This news sent the dollar lower and provided strength for futures. This news followed similar comments from the Fed, which stated last week that interest rates would stay low for an extended period of time. The decline in the dollar also pushed gold prices to a new record high.

Last week, traders took their cue from economic news, but the economic calendar is very light this week. There remain plenty of earnings reports, which have shown improvement, but traders are still concerned about the jobs market and how quickly the Fed will start to raise rates. The fact that the unemployment rate spiked to a 26 year high of 10.2 percent in October is a concern, but it hasn't hurt the bulls so far.

Kraft (KFT) will be a focus Monday after the food giant launched a hostile bid for Britain's Cadbury (CBY). Cadbury had already rejected an offer from Kraft and the new offer leaves the bid just above $16 billion. KFT shares are flat in early trading with CBY shares up more than one percent to a price above $51.

General Electric (GE) and Comcast (CMCSA) have come to an agreement over the price to jointly own NBC Universal. The deal could be done within the week with both sides agreeing that the joint venture is worth $30 billion. This would leave Comcast with 51 percent ownership and GE a 49 percent ownership. GE shares look to open the session higher by three percent with CMCSA shares rising two percent.

There are varying ideas of what to expect out of the stock market heading into 2010. One side feels that fund managers will decide to sit out the last few months of the year, taking the gains already made this year. However, another side feels with interest rates low and the economy on the mend, gains will continue.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site


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