Market Wrap – "Do Over"

Today can essentially be erased from the charts. Because in the end we ended right back where we started with respect to the S&P 500 Futures

This morning in the pre market I wrote that the S&P 500 Futures had moved right up to the short term resistance level of ~900. Then before the market opened the futures gathered additional strength and began a charge above the 900 level. At around 8:45am (US EST) I took a small position in SSO (Ultra S&P 500 -long-) in case there was going to be a substantial push to make a bear market rally off the resistance. I kept my finger on the button for most of the morning when at 12:30pm the market moved back below the resistance level on high volume, so it was at that time I pushed the button and got out of my trade.

Then 20 minutes later the S&P 500 E-minis broke back above the 900 resistance level once again. This time there was added strength that

carried the S&P up to 919. But, in the space of just a few minutes it all fell apart once again and sold down into the market close. And if that was not enough crazy action for one day we then received some bad news from Texas Instruments, Con-Way Freight, and Federal Express. All three issued disappointing news with respect to earnings outlook. This sent the after market futures all the way back down to the 900 level. So if you missed the entire day and are just now looking at the S&P 500 chart you would think nothing happened at all since we are right back to where we started.

You can clearly see in the two charts above just how important the ~900 level was today. The more interaction with a price level there is; the more confirmation there is in its importance.  

So where does all this leave us? I will still be watching the 900 level closely for a bullish or bearish tone. But today ended up being a ‘Groundhog Day"

"Groundhog Day": the phrase is sometimes used in English to mean "the same thing over and over again"

Lets see what the overnight hours give us for tomorrow. Right now we are still looking at the potential of a bear market rally, or a complete failure very shortly and this attempt by the bulls to create a rally will fail. The battle continues for another day. Don’t forget we still have the looming financial assistance bail out for the auto manufacturers. Still no word out of Washington DC on a final decision. 

News after the bell:

MOLX: CUTS Q2 FORECAST TO R $650-670M V $773ME (HAD SEEN $750-800M)
- Company notes it is unable to provide EPS guidance at this time.
- Also expects a cut in employee headcount and related costs

CNW: GUIDES FY08 $2.20-2.35 V $2.79E (HAD SEEN $2.60-2.80); REDUCED ITS NATIONWIDE WORKFORCE BY ABOUT 8% OR 1,450 POSITIONS
- Company comments: With three weeks remaining to the end of the year, the company is maintaining a relatively wide range in guidance, due to turbulent market conditions and lack of reliable visibility into an economy which continues to deteriorate, noted Douglas W. Stotlar, Con-way president and chief executive officer. "While we are focused on aggressive cost-reduction measures, over the past two months the effect of decelerating volumes in the LTL market, coupled with pricing pressures and lower fuel surcharges have significantly curtailed expectations for 2008 earnings, the fourth quarter in particular."

FDX: GUIDES Q2 $1.58 (HAD SEEN $1.40-$1.60) V $1.54E; GUIDES FY09 $3.50-4.75 (HAD SEEN $4.75-5.25) V $5.23E; CUTS 2009 CAPEX EST TO $2.5B FROM $3.0B
- The company cites macroeconomic conditions for its forecast.
- Company Comments: "Second quarter results benefited from rapidly declining fuel prices and continued cost management," said Alan B. Graf, Jr., executive vice president and chief financial officer. "However, demand for our services weakened sequentially throughout the quarter and global economic trends continue to worsen, substantially reducing our second half outlook.

TXN: MID-Q UPDATE: GUIDES Q4 $0.10-0.16 V $0.31E, R $2.3-2.5B V $2.9BE
- Previously guided Q4 EPS $0.30-0.36, R $2.83-3.07B. SAYS FACTORY UTILIZATION DECLINED TO 40%, IMPLEMENTED HIRING FREEZE, IS REDUCING INVENTORY AND WILL CLOSE SOME LOCATIONS
- Sees no "snap back" recovery in near term

BRCM: CUTS Q4 SALES GUIDANCE TO R$1.05B-$1.1B (HAD SEEN $1.17B-$1.24B) V $1.19BE; SEES Q4 GROSS MARGIN DOWN 105 TO 130 BPS (HAD SEEN DOWN 50-75 BPS Q/Q)
- CFO says that the company will focus on protecting its cash flows. Says customers requested delivery adjustments and saw significant cancellations.

Anheuser-Busch InBev: WILL CUT 1,400 US JOBS

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