S&P futures are flat this morning but Nasdaq futures point lower thanks in large part to more weakness from the index's largest component, Apple (AAPL). AAPL has been building a mini-wedge pattern at lower level and is set to open below it, as well as below the pivot low from December 6th. If the stock opens at these current levels, the $505 area will be massive support (from the November 16th reversal low).
Positive economic data out of China is helping the S&P futures avoid losses this morning. HSBC's China manufacturing PMI came in at 50.9. the highest reading in more than a year and the Chinese market rallied on the news. At 8:30am ET consumer prices fell 0.3%, worse than the 0.2% drop that was expected.
Despite all of the peripheral noise, the fiscal cliff is still having the most profound effect on the action. The negotiations are at a stalemate, and the markets are following a similar narrative, unable to break with momentum to the upside or downside. Perhaps as the end of year deadline approaches anxiety is growing and leading to the selling pressure we've seen over the last day and a half. In recent public opinion polls, Americans overwhelming favor a compromise but generally side with President Obama's approach of letting tax cuts expire for the wealthiest Americans.
After beating on EPS exepectations last night Adobe Systems (ADBE) is set to open at 52-week highs. Active traders will be watching the stock for potential momentum. It will be important to see how much of the gap holds. Alcatel-Lucent (ALU) is up around 10% this morning after the beaten-down telecom equipment company said it has secured additional financing to buy more time to return to profitability. Split-adjusted, the stock traded as high as $86.25 in 2000, and yesterday closed at $1.10.
Traders generally pare down risk and expectations heading into the holiday season. Especially with the choppy action surrounding the fiscal cliff headlines, there is often more risk than reward in this tape. Keep a narrow focus if you are going to trade actively, and don't be stubborn with losers.
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*DISCLOSURES: Marc Sperling is long FB, ZNGA, ZNGA calls, ANTH, AMD, DELL calls, GRPN, FB calls, DNDN calls, AOL calls, GS, GS calls, PANW calls, RLGY, MLNX calls, C calls, GOOG, MA, AAPL calls, BIDU calls, CMG calls, CMG, SHOS.