Rebel Traders – Analysis Without The Hype

The Russian stock markets have been halted – lock limit down. Confidence continues to bleed OUT of the U.S. markets as the threat of more financial sector problems coming from Europe and Japan appear to be building.

This added to the growing uncertainty of the U.S. auto makers, economic reports of more manufacturing sector weakness, and now Kansas does not have enough money to issue tax refunds and may not be able to meet payroll obligations this Friday. Kansas, the entire state.

Confidence in Treasury Secretary Tim Geithner is falling apart by the seems it would appear. Today is the day the $780 Billion stimulus bill will be signed into law. So far the market is saying ’so what’.

S&P 500 futures have continued to decline throughout the overnight hours and are currently BELOW a critical level of 797. At this time there is some trend line support holding the futures at around 793.

Next major support level is 743 (November lows). But, what I continue to put emphasis on is the break of the triangle pattern that had been taking shape over the past few months. A solid close below the triangle line would add significant confidence in that pattern turning into a ‘confirmation’.

The result of that pattern confirmation provides us with a new price target for the S&P 500 and that target is 545 in coming weeks or months from now.

S&P 500 Futures - 5 Minute Chart

S&P 500 Futures

Overnight action was not as wild as some of the sessions we have experienced in the past many months but they continue to bounce around among support and resistance levels, which there are plenty of.

At this time the futures indicate a flat to soft upward opening. I am still watching 830 and 850 as resistance levels on the upside.

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Some notable reports pre market:

- Volume declined 17% y/y, and was down in all operating segments and in all geographic areas, reflecting the global economic downturn as well as the de-stocking that occurred through most value chains
- The Company reduced production to match market conditions. This resulted in historically low operating rates, particularly in December which was 44%.
- For the quarter, the operating rate was 64%, a rate not seen in more than 25 years

- Forcing merger under current circumstances may harm both Dow and Rohm and Hass; reiterates that it never said that merger would never be completed.

Archer-Daniels-Midland Company Reports Q2 $0.91v $0.68e, R $16.67B v $16.97Be

(read more…)

The mood of the market this morning is clearly in the camp of ‘lack of conviction’. Overnight futures were rather wild with the peak at 874 and the low at 857. No clear direction trend has been established in the overnight hours so we remain in a watch and see. I am however looking at a rising channel on the 5 minute futures chart, a break above or below should establish ’some’ direction trend in the very short term.

S&P 500 Futures - 5 Minute

NOVEMBER TRADE BALANCE: -$40.4B V -$51.0BE; LOWEST IN 5 YEARS
- Prior revised from -$57.2B to -$56.7B

- Nov data 4th consectutive time both exports and imports decline
- Import decline is the highest on record

LIZ – CUTS Q4 EPS GUIDANCE -$0.15 TO -$0.00 V $0.19E ($0.19-0.24 PRIOR)

ICSC/UBS WEEKLY CHAIN STORE SALES W/E JAN 10TH: -2.3% W/W; -2.2% Y/Y

LXK – CUTS Q4 EPS $0.71-0.76 V $0.81 ($0.70-0.80 PRIOR), GUIDES Q1 EPS $0.65-0.75 V $0.73E, CUTS 375 JOBS (ABOUT 2.8% OF WORKFORCE)