It looks like a strong opening today, based on how futures are currently trading. But from a technical perspective, this is not a good way from which to reverse the stock market's recent slide. The market is now heavily oversold, so a bounce is due. But at some point over the near term, it is likely stocks will reverse to the downside and, at minimum, retest yesterday's lows.
Interest-rate stability would help equity prices a good deal at this juncture. So decent results in the three pending Treasury auctions (today, tomorrow and Thursday) would be a constructive development. In this regard, good auctions in the five- and 10-year notes are most important, particularly the 10-year issue on Thursday. But there is a good deal of inflation-related data due out during the remainder of this week, and I do not expect the results to be good, on balance. But some of this expectation already has made its way into interest rates and stock prices.
My objective of several weeks ago for the bellwether market measures was at least a test if not violation of respective 200-day moving averages. This more or less has taken place -- something else arguing for a short-term bounce. But, as stated earlier, it is unlikely a bottom has yet been made, or at least has not yet been confirmed, in the market's current down-leg. Still, as discussed in yesterday's missive, ("Mostly Stocks"), such a bottom could still be an event of this week.
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DJIA, NASDAQ COMPOSITE AND S&P 500 CLOSING
PRICES ON SELECTED DATES VERSUS RESPECTIVE
20-DAY, 50-DAY AND 200-DAY MOVING AVERAGES
(In Percent or Portion Thereof)
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DJIA Vs. NAZ Comp. Vs. S&P 500 Vs.
------------- ------------- -------------
Date 20D 50D 200D 20D 50D 200D 20D 50D 200D
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2004
05/10 -3 -3 -<1 -4 -5 -2 -3 -3 1
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04/09 1 -<1 5 3 2 7 2 <1 7
03/12 -3 -3 5 -2 -4 5 -2 -2 6
02/13 <1 2 11 -1 <1 12 <1 3 11
01/09 1 4 12 4 6 19 2 4 12
2003
12/26 2 5 12 1 2 14 2 4 10
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NOTE: I'll get out a short piece later with the results of the Treasury's three-year note auction later today. And incidentally, I have not ruled out a possible long-side trade -- emphasis on "trade" -- in the Treasury 5.375s of 2031 in the model bond account.
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