Housing Starts, Falling Euro Yields Outweigh IBM, Intel Earnings

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US stock futures point to a slightly higher open Wednesday morning, looking to build on the rally from the last two days. Housing starts hit a four year high this morning, rising 15% to 870,000, handily topping Wall Street estimates. Spanish and Italian bond yields also fell overnight, helping the market's cause. Yesterday the Dow logged its biggest gain since QE3 was announced on September 13th, and we may need some rest to digest this two-day bounce.

Bank of America (BAC) continued a busy early earnings season for the financial sector. The bank broke even in the third quarter but was expected to lose seven cents a share. Following the report, BAC is flat. Once again, a bank reported better than expected earnings but is having trouble pushing higher. With strong rallies over the past few months, stellar reports were priced into the sector that have so far not been quite met. Bank of New York Mellon (BK) also reported this morning, handily topping expectations. BK is currently up almost 2% pre-market.

Futures are higher despite mediocre earnings last night from IBM (IBM) and Intel (INTC), which are both set to open down around 4% this morning. Many were wary of a possible weak earnings season this quarter, and these are two more example of less-than-stellar reports that, although they are not leading to a lower open this morning, could weigh on market sentiment.

Resistance in the S&P stands at 1460-1463, and then 1470. Support sits 1448-1451 then 1442. After a strong two-day bounce, it's not time to get aggressive with new positions, but we could see this rally continue. The pull-in only came into shallow retracement levels, and macro bullish composure remains intact. In the Active Trading Course, we teach that you judge rallies based on how deep of retracment levels they test, and this one bounced at a key inflection point.

*DISCLOSURES: Scott Redler is long AAPL, LULU, F, GM. Short SPY.

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