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Stocks trying to recover from selloff

David Russell (david.russell@optionmonster.com)

Stocks are trying to recover from yesterday's drop as investors prepare for a heavy flow of corporate earnings.

S&P 500 futures were up 0.5 percent but are now just slightly higher. Europe has also surrendered earlier gains. Japan and China both fell more than 1 percent overnight following late declines in the United States.

The S&P 500 initially rose yesterday but slid into the close after the Federal Reserve left its monetary stance unchanged. A potentially bearish technical backdrop is also developing, with the index range bound since the summer as its 10-, 20-, and 30-day moving averages turn negative. That could make some chart watchers think that momentum is turning lower.

But several other catalysts may influence sentiment. Today is one of the busiest sessions of earnings season, with results due this morning from companies like Ford Motor, Celgene, Dow Chemical, EMC, Hershey Foods, Viacom, JetBlue, Blackstone, and Occidental Petroleum. Visa, Google, Amazon, Biogen Idec, JDS Uniphase, and Synaptics follow in the afternoon.

Today also brings initial jobless claims at 8:30 a.m. ET, pending home sales at 10 a.m. ET, and natural-gas inventories at 10:30 a.m. ET. The next two sessions have two other major events, as well: the preliminary estimate for fourth-quarter gross domestic product tomorrow morning and the Institute for Supply Management's manufacturing index Monday.

In company-specific news, F rose more than 2 percent after earnings and revenue beat forecasts. HSY fell 3 percent after missing estimates and Facebook is down fractionally despite reporting strong results last night. Dow Chemical and Coach about rose more than 4 percent after profit surpassed estimates. Revenue, however, lagged at both companies. Chinese Internet giant Alibaba fell 6 percent on weak sales.

Price action has been mixed in recent weeks, with few individual groups clearly outperforming on our researchLAB market scanner. Nonetheless, there appears to be strength emerging among oil refiners, wireless-tower stocks, and video-game makers.

Commodities are mixed today. Oil rose fractionally, but gold, silver, and copper all fell more than 1 percent. A strong U.S. dollar is the main theme in foreign-exchange markets.

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