Behind Selected Financials’ Quiet Rise
Wall Street is starting the week in a selling mood, but
some latent strength in the financials suggests a key sector could provide
strength to the major indexes that are approaching their 50-day moving averages
in two-step pullbacks.
The Nasdaq is down 58.73 at 2156.41, the S&P 500 is
down 13.51 at 1251.45, and the Dow is down 77 at 10,899.
Spurring the subdued strength in the financials is
“buy-the-rumor” sentiment in American Express
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PowerRating). Barron’s magazine
cited in an article on Saturday that Merrill Lynch could be in talks to buy the
credit card giant in order to expand Merrill’s asset management business and to
expand internationally. AXP is up .21 at 41.20.
Also in the financials, although analysts downgraded and
lowered earnings estimates for JP Morgan
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PowerRating) last week, sending the stock
down 14%, the stock appears to be regaining traction along with fellow Dow
financial component American Express. Additionally, in a tribute to a technique
used by Carolyn Boroden in her Stock Index Futures Price
Action Levels subscription service, JPM is holding at a clustering of
Fibonacci support, at the 50%, 61.8%, and 1.618% retracements of prior
swings. JPM is up .31 at 44.51 as the financials flirt with positive
territory.
As blue-chip indices pull back, look for institutions to
provide some support off their closely approaching 50-day moving averages. The
Nasdaq, S&P 500 and Dow are also in two-step pullbacks, patterns that could
coincide with the 50-day lines’ support and setup entry triggers off prior days’
highs.
IBM
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1.50 at 117.60, coming back from a doubtful, down Friday that suffered from a
software glitch that closed the New York Stock Exchange. Despite the exchange
resuming trading at around 11:35, IBM was one of the last stocks to open,
preventing an accurate reading of the Dow average until approximately 1:40 PM
Friday.
Direct Focus
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PowerRating), an infomercial marketer of
fitness products in the retail category, is the second-biggest point gainer in
stocks that trade more than 300,000 shares per day. Last quarter revenues rose
58%, which help account for the stock’s EPR of 93 and three-month RS reading of
93 from TradingMarkets Stock
Scanner. The stock logged its third- and fourth-biggest volume days ever last
week as it gapped through its 35.55 pivot and is 2.37 higher at 42.89, an all
time high.
Presaging a possible decline in the Nasdaq 100
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a Pullback From Lows
reading in September Nasdaq 100 futures
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indicators page is making good. The futures gapped below the trigger and are
continuing lower. The Nasdaq 100, as well as the S&P 500 and Dow, also had a
down slant going into today’s session based on down arrows on the CHADTP and TRIN Thrust
readings from the
Market
Bias Indicators Page.
In other markets, the leading contract on the
Implosion-5 List,
British pounds
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PowerRating), sank to a new 15-year low today, falling in
tandem with continental currency futures. A report out today showed producer
prices in the UK rose at their fastest pace in seven months, which crimps the
Bank of England’s maneuvering room to cut interest rates to stimulate the
economy. Perhaps more importantly, the reality that the UK might join the
12-nation, single-currency euro bloc became more real as the BOE released a
report predicting the country could start using the currency much sooner than
originally forecast. The view here is that the pound will have to fall in value
before entry into the euro currency bloc. The euro and Swiss franc are trading
at their lows of the year.