Can S&P Reclaim 200-day Moving Average?
US stock futures are slightly higher this morning after some upbeat earnings and comments from Federal Reserve Vice Chair Janet Yellen, but are paring gains after weak producer price and retail sales data. The market will once again attempt to mount a rally off lower levels, which has recently been a tough task. Both last Friday and yesterday, stocks have rallied in the morning but pulled back hard to finished in negative territory.
In a speech Tuesday night, Yellen proposed linking the Fed's zero interest rate-policy to stated goals of the her office's dual mandate: controlling inflation and full employment. Rather than vague "low for longer" language in the Fed's statements, numerical targets would be used. Yellen's comments are weighed heavily because of her large influence within the Fed and the fact that she is a widely-tipped successor to Chairman Ben Bernanke if he steps down in 2014.
President Obama today is due to hold his first press conference since being re-elected. He will begin meeting with congressional leaders Friday to begin talks on the so-called fiscal cliff, and questions will likely center on that hot-button issue. Reports suggest Obama, perhaps emboldened by his re-election, is now seeking $1.6 trillion in new tax revenue over the next decade, double the amount he asked for in negotiations that broke down in mid-2011.
Also adding to bullish sentiment this morning are a trio of strong earnings reports. Abercrombie & Fitch (ANF) is on fire this morning, currently 32% higher before the open after the apparel company reported a 40% rise in third quarter earnings. Stronger margins and better-than-expected international sales were the catalysts for the strong EPS numbers.
Shares of Cisco (CSCO) are up over 7% this morning after the company exceeded earnings expectations last night and also delivered upbeat forecasts. The strong report could help boost the beleaguered tech sector that has led the market lower over the last several week.
Staples (SPLS) rose 4% this morning despite swinging to a third-quarter loss, largely due to a large impairment charge and double-digit drop in international sales. A weak report was priced in apparently, and the numbers should be enough to relieve pressure on the stock, which had pulled back 35% since late March.
The market right now is devoid of leadership, with the tech sector going AWOL. In particular, stocks like Apple (AAPL) have succumbed to heavy selling pressure, making it harder for bulls to wrest back control of the proceedings. It seems that every decent bounce by AAPL since late September has been met by heavy selling. The stock is in no-man's land below its 200-day moving average, with major support at $528.66.
Traders will also be watching Facebook (FB) closely as 800 million shares will expire from the IPO lockup today, which represents 35% of outstanding shares. The stock is actually 1.8% higher in the pre-market, and this could turn into a "sell the chatter, buy the news" type of event.
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*DISCLOSURES: Marc Sperling is long ANTH, RIMM calls, FB 24 calls, FB 17 puts, VXX calls, RIMM, SRPT, YHOO, AOL, SRPT calls, AAPL calls, TLT puts, MLNX calls, AIG, FSLR calls, FIO calls, AAPL, SHOS.
Short GS
