While last week's pullback was sizeable, the big uptrend that's been in place since early June still hasn't been snapped yet. The dip did wave a red flag, though, and more weakness from here may convince more investors that stocks DIA, QQQ and IWM are just too risky to own right here, right now, with the current circumstances.
* Morgan Stanley*
** I Know First algorithmic system **
issued positive signals regarding markets near term direction.
Holiday Sales Predicted to Rise 4.1%
Americans are expected to spend more during what's traditionally the busiest shopping season of the year, but they're not exactly ready to shop 'til they drop like they have been in the past two years.
The National Retail Federation, the nation's largest retail trade group, said Tuesday that it expects sales during the winter holiday shopping period in November and December to rise 4.1 percent this year. That's more than a percentage point lower than the growth in each of the past two years, and the smallest increase since 2009 when sales were up just 0.3 percent.
The projections are an important indicator for retailers that depend on the last two months of the year for up to 40 percent of their annual sales. But the estimates also offer valuable insight for economists who closely watch consumer spending, which accounts for up to 70 percent of economic activity.
"The ADP report looked pretty good, that should give some positive hope to the overall market, which is experiencing a migration of concern from areas such as Greece and the fiscal cliff over to the third-quarter earnings season," said Robert Pavlik, chief market strategist at Banyan Partners in New York.
S&P 500 futures rose 2 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures added 16 points and Nasdaq 100 futures rose 8.75 points.
U.S. stock-index futures struggled for direction in choppy trade ahead of Wall Street’s open on Wednesday, with the ADP private-sector employment report and a survey of business conditions expected to be closely watched, while continued speculation over a Spain bailout kept a lid on gains.
There are worries over whether or not it will be a bailout and whether such a bailout would trigger credit downgrades," said David Thebault, head of quantitative sales trading, at Global Equities.
"But beyond that, markets have not completely realized how powerful the new ECB policy is and how it will reshape things, so there's still upside."