Higher open on tap as crude slips
Small-cap stocks are expected to open modestly higher Monday, underpinned by tame energy markets overnight and some enthusiasm spillover from last week’s solid performance. The Russell 2000 (NYSE:IWM) was up about 0.4% in overnight trading, which translates to an open near 756.
Crude oil prices slipped into the red heading toward the U.S. stock market opening, pulling down off overnight highs. However, the U.S. dollar was weak this morning, down about 0.3% against both the euro and the yen; if the dollar starts to slide during the session, it could provide a supportive hand to energy and other commodities.
In stock market trading around the world, the news was mixed, with European shares up this morning, but Asian markets primarily lower. China stocks were down 5.4% and continue to slump through the Olympics as investors there frown on a lack of plan to bolster equities. Elsewhere in Asia, Japan was up 1.1%, Hong Kong down 1%, Taiwan down 2.7%, Australia flat, Singapore down 0.7%, South Korea down 0.2% and India down 0.5%. The Pakistan market surged 4.4% as President Musharraf announced his resignation.
Large caps in the news overnight include Broadcom Corporation (Nasdaq:BRCM), which was up some 4% following a bullish article in Barron’s. Also, Lowe’s Companies Inc. (NYSE:LOW) topped the earnings forecast and could be a supportive theme for the home improvement retail sector today. On the downside, The Hershey Co. (NYSE:HSY) was down about 4% overnight as the company said it would raise candy prices by 10% to offset higher raw materials costs.
The chart picture in small-cap stocks is a little top-heavy on short-term studies after making new highs intraday Friday, but closing in lower territory. Still, the market set the highest weekly close of the year, so any resumption of the upward thrust could quickly counter the topping issues on daily charts. For today’s action, look for resistance at 758 and 764. On the downside, support comes in at 750, 742 and 734.
