Thursday, March 4, 2010

Markets Headlines and Technical Updates $SPX

·         SP500 technical update – from JPMorgan’s M Krauss - Close only marginally higher, after a 1125.64 one-month high. Expect some pause/correction soon, as SPX is approaching the 1130 Jan range break/interim barrier. Day resistance is 1121.50. Day support is Tues’ 1115.71-1116.51 hourly gap up. Short term support is 1112, then 1107-1105. Last Thur’s 1086 low held the Feb 5 50% retrace, and 1076.75-1079.13 Feb 17 hourly bull gap. Feb 26 confirmed an upside reversal month above 1074 (Mon already met min “higher high”). The 1044.50 Feb 5 low held the 1043 July 38% retrace/4thwave obj. The 1150.45 Jan 19 peak neared four targets at 1145-1159. The S+P has neither seen its high (nor low) for this year. The NYSE cumul-ative advance-decline line reached an all-time high on Mon & Tues. Cyclical bull markets tend to top 6-8 months later. Our 2010 Outlook suggests a range view between a 950/1000 low and a 1150/1200 high, with a best case to 1229/1240.

·         S&P faces tough Fibonacci resistance according to  Bloomberg - There is a significant amount of technical resistance between current levels and the January highs – Bloomberg 

·         Derivatives commentary - US Indices: Near dated vols came lower, and although slightly bid during the initial afternoon selloff, ended lower on day. Short dated skew came lower, and there were sellers of near dated variance, although longer dated variance remains fairly bid. 

·         US companies are holding near record amounts of cash, which could drive pickup in M&A; the 382 non-financial companies that have reported Q4 results are sitting on $932B in cash and short-term investments, up 8% Q/Q and up 31% Y/Y.  nearly 50% of deals so far in ’10 have been all cash vs. 24% of deals in ’09.  WSJ. 

·         Small signs of stress starting to creep into junk markets due to sovereign woes - The percentage of junk bonds with yields at least 10 percentage points more than Treasuries rose to 16 percent as of March 3, from 15.8 percent at the end of January – Bloomberg

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