EQUITY FUTURES REGAIN NEARLY ALL OF MONDAY'S LOSSES, AS FED CHAIRMAN CALMS FEARS OF BANK NATIONALIZATION, FOCUS TURNS TO VALUE SHOPPING.
US Equities staged a massive rally, regaining nearly all of Monday's losses and overcoming dismal reports on consumer confidence & housing prices, as the 1 st of two speeches this week by Federal Reserve chairman Ben Bernanke helped to calm fears regarding the nationalization of major banking institutions. Citigroup & Bank of America, the two primary candidates of speculation regarding the nationalization strategy, led a broad based rally that included retailers, after Macy's & Nordstrom's posted better than expected sales figures within the higher end retail category. This was done primarily through effective inventory management. Consumer stocks overall received boosts from better than expected results from HJ Heinz & Home Depot.
Technologies gained overall, however the mood of the market remained tense with regards to future earnings & the outlook for growth. While the markets seem to have been given a reprieve from falling into the abyss of the early 1990's the mood regarding financials is likely to remain volatile through the period where the financial institutions are going through their stress tests to determine if their capital reserves will allow them to function with or without TARP intervention. The results of these tests & the structure of the financial institutions once the grade is received should offer a strong indication regarding the direction of the markets and whether volatility is destined to increase or decrease in the foreseeable future.
Technically, March Dow futures retraced & filled in the gap left from the 7260 level. The market could be poised to move another leg up to a strong initial resistance point of 7420. Expect support to settle in at 7210, with a break of that level setting the market up to test the 7030 range.
DJH9 (MARCH DOW)
SPH9 (MARCH S&P)
NDH9 (MAR NASDAQ)