US stock futures again point to a higher open on Wall St Wednesday, with bank earnings back in focus. Yesterday the market opened from the long holiday weekend nearly 1% higher, but, as has been the norm in 2012, the market was not able to get any upside momentum after the gap up. Earnings season has been a mixed bag and European problems have hardly subsided, still investors are choosing to focus on improving data and the possibility of more policy intervention in world capital markets.
So far this earnings season, the banks as a whole have disappointed with earnings. JP Morgan (JPM) had become one of the stronger banking stocks technically, but failed to meet expectations with its report last week and traded lower. Citigroup (C) was next yesterday, announcing horrific numbers and trading sharply lower. Wells Fargo (WFC) was the only bank to save face for the sector, posting a strong quarter yesterday and finishing the day in positive territory.
We had two more on tap this morning, and it looks like more of the same negative headline numbers. Bank of New York Mellon (BK) is down almost 4% pre-market after seeing its fourth quarter net income drop 26%. Most notably, Goldman Sachs (GS) saw its fourth quarter investment banking revenues fall 43%, but were able to narrowly exceed trimmed net income expectations . The shares of GS are narrowly higher, appearing to have priced in an underwhelming quarter.
While the Euro zone remains in a pre-carious position, the threat of policy intervention is perhaps keeping the market from selling off. Sources told Reuters overnight that the IMF needs to, and is looking to, raise at least $1 trillion additional for its Euro rescue fund. Negotiators in Greece are working with creditors in just the latest attempt to avoid a hard default, and many are not optimistic about the results, instead starting to prepare contingencies for such a shock to the system.
Yahoo! (YHOO) is up more than 3% pre-market after news that CEO Jerry Yang will step down from all positions held with the company. With the rise of Google, Yahoo! has fallen down the search pecking order, but Yang has long resisted the idea of selling the company, much to the chagrin of many shareholders. Back in 2008 Microsoft offered $33 per share for the company, but he turned it down. The stock is now trading just shy of $16. Investors are hoping that his ouster opens the door to a possible takeover.
Shares of LED maker Cree (CREE) have fallen more than 4% overnight after forecasting lower profit for the third quarter. On an even more extreme note, Majesco Entertainment (COOL) is down 25% after widely missing the earnings mark and issuing downbeat forecasts for 2012. Linear Technology (LLTC) bucked the trendm surging 10% overnight after the integrated circuits maker released strong revenue numbers.
TECHNICAL TAKE
Not much happened overnight, and that appears enough to push the futures higher these days (a bullish sign). Markets continue this lethargic crawl higher as the active trader picks the trades of the day. Right place, Right Time has been the name of the game so far in 2012.
Indices are riding this new Ascending channel that you can see in my charts below. Ride that trend as long as it continues, but have a plan if it changes!
S&P futures are up 4-6 handles and we can use yesterday’s high of 1303 as new point of reference. Above that is 1308-1312, with a bigger zone at 1318-1322.
Support to watch at yesterday’s low of 1290 and then the 10-day moving average around 1285. A daily close below 1280-1285 would push me to take off some more long exposure.
The News of IMF wanting to increase lending power by $1 trillion is being greeted as good news, even though it reinforces the fact that Europe is in dire straits.
All the kings horses and all the kings men are doing all they can to keep this Humpty Dumpty World propped up as long as they can! Don’t fight the tape; embrace it. We will see when the composure changes and adjust.
*DISCLOSURES: Scott Redler is long VXX, SPY, OIH, AAPL, NFLX, CSCO, RIMM, QCOM, WYNN, POT, GOOG calls. Short DIA.
