Looks Like a Trading Range
Stocks pulled back a bit into the closing bell on Monday as the battle over the next level of resistance appears to have taken hold. There were no obvious headlines cited for the retreat seen in the final 25 minutes of trading. However, our sources report that comments attributed to two Fed officials suggesting that QE2 should be halted in the near-term may have been related to the quick dive in the major indices.
The market started the day on a modestly upbeat note with the indices moving to new highs for the current rally cycle. The economic calendar, while hardly robust, did seem to lend a hand as the spending component of the Personal Income and Consumption report was the best in four months. Also adding to the modest level of enthusiasm was the fact that Pending Home sales rose unexpectedly. However, it is clear that any rebound seen in the housing market is very uneven at this stage.
We’re of the opinion that stocks are likely to remain trapped in a trading range until traders get a better look at the earnings reports due to start flowing in a couple weeks. And with the Jobs report due out on Friday, it isn’t surprising to see that some traders may have wanted to take a step back from their long commitments yesterday afternoon.
Turning to this morning… There are new reports out of Fukushima this morning that reinforce the fact that recovery is going to be a long-time coming in the Japan nuclear crisis. In addition, NATO is meeting today to discuss their next move and how to deal with a Libya that does not include Gadhafi. Stocks were modestly lower in the foreign markets and futures are pointing to a mixed-to-flat open on Wall Street.
On the Economic front… We don’t have any economic data to report before our report is published this morning. However, we will get reports on the Case-Shiller Home Price Index (January reading) and an important Consumer Confidence report (March) at 10:00 am eastern.
David D. Moenning
Editor: The Daily Decision
