Big opening jump on tap for small caps
The Russell 2000 (NYSE:IWM) is poised for a sizable opening leap today following a bout of overnight gains as investors embraced earnings news from big-name companies like Citigroup Inc. (NYSE:C) and Google Inc. (Nasdaq:GOOG). In after-hours trading, the Russell was up about 1.2%, which would translate to a cash opening for the Russell in the 716 zone.
The manufacturing sector has been a worry spot of late, fueled by slumping economic conditions, but Honeywell International Inc. (NYSE:HON) and Caterpillar Inc. (NYSE:CAT) both released earnings above the forecast, so the good news this morning was multi-pronged — tied to financials, technology and manufacturing.
Another positive development overnight was a jump in the U.S. dollar, which climbed about 0.8% versus the euro, and 1.5% versus the Japanese yen. In addition, gold slumped about 3% and crude oil backed down a couple of dollars from Thursday’s record highs.
Citigroup jumped some 6% overnight even though it posted a bigger-than-forecast loss, but investors took the banking giant on good faith that they were on the right track to put credit crunch issues in the rearview mirror.
From a charting standpoint, if the Russell 2000 can sustain the projected opening drive through 715, then the next key resistance zone is at 720.50, which corresponds to the recent peak from April 4. If that 720.50 area is tackled, then it opens the door for a run toward critical resistance at the bounce highs near 731 that were set on Feb. 1. If the market can sustain the run that has been hammered out this week, it will be a big week from a technical analysis standpoint.
Within the small-cap sphere, earnings news appears to be slowing down somewhat today. Morning reports are on tap from Hutting Building Products, Inc. (NYSE:HBP) at 11:00 a.m. ET, and Rurban Financial Corporation (Nasdaq:RBNF) at 10:00 a.m. ET.
