What’s This Market Action Saying To Expect?
Markets are discounting machines, meaning they look
ahead of today’s news and price financial instruments such as stocks
according to beliefs and expectations about future performance. The S&P
and Nasdaq Composite are striking new multi-month lows, so what is that
saying about the market’s expectations?
With earnings pre-announcement season nearly upon us,
the market appears to be saying it expects lots of companies to warn about
poor quarterly performances. And even though the Fed cut interest rates to
their lowest level in years just two weeks ago and despite recent reports
that manufacturing may be recovering, the markets’ downside price action
suggests we will undercut the Spring 2001 lows.
The Nasdaq is down 48.15 at 1722.63, the S&P 500
is down 15.82 at 1117.12, and the Dow is off 91 at 9906.
TradingMarkets Futures Indicators page has
proprietary indicators that are updated daily to help guide you in gauging
short-term market potential of the major indexes. The S&P 500, Nasdaq
100, and Dow futures are all closely related to the cash indexes and are
kept close in price through arbitrage. Today the
S&P 500 futures
(
SPU1 |
Quote |
Chart |
News |
PowerRating) are on the
Implosion-5 List, giving the edge that the broad market could go down.
In a classic example of a descending triangle, make
sure to check out today’s intraday chart of the SPU1 contract. You will see
a pattern of lower highs and a more solid band of support in the 1126 area.
When patterns such as these form, you can use measured move analysis to
project where the price might trade to. In Future Editor Marc Dupée’s
article on the subject available in the Futures Education section, measured
move analysis projects a move twice the distance of the high to low
formation of the triangle. Hence, from the 1137.50 intraday high to 1126
support, traditional analysis suggested the S&Ps would move to about
1115. Just past mid-session, the S&Ps are rebounding off an 1115.50
low.
Merrill Lynch is out with industry estimates and downgrades, negatively impacting technology shares. Merrill predicted sales of
mobile phone handsets will drop 5% this year and next and that sales of
networking gear will fall by an equivalent percentage.
Networkers
(
NWX |
Quote |
Chart |
News |
PowerRating) are getting hammered, down 7%,
and the North American telecom sector
(
XTC |
Quote |
Chart |
News |
PowerRating) is also off 3.83%.
Also leading technology down, semiconductors
(
SOX |
Quote |
Chart |
News |
PowerRating) are down 5.24%.
Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating), a maker of mobile phone handsets
and chips for the devices, is playing a big role here, down 16% after
Merrill downgraded the stock.
One point to bear in mind as the markets come
off new multi-month lows. As a trader, it is imperative to remain nimble.
From TradingMarkets Market
Bias Indicators Page, there are five signals suggesting a turnaround could
come in today’s session or tomorrow.. Although it is dangerous to pick a
market bottom, the collective indicators are a strong indication — for the
second day in a row — that we could see green before the session’s over.