Mild rise as market ponders Obama plan; Asia up again
U.S. stocks were set for a modest advance on the opening amid speculation that President-elect Obama’s stimulus package could be as big as $850 billion. Additional support could stem from yet another rise in Asian stocks, which climbed to a six-week high. However, profit news remains mostly abysmal, and the latest jobs numbers were predictably awful, which could stall upside progress. The Russell 2000 (NYSE:IWM) is seen opening up about 0.3% near 488.00.
The weekly claims report came in at 554,000, which was down from 575,000 last week, but basically in line with market expectations. The four-week moving average on claims rose to 543,750, which is the highest point since December 1982.
On the earnings front, small cap video game maker Take Two Interactive Software Inc. (Nasdaq:TTWO) missed the forecast and fell hard in pre-market trading. MEMC Electronic Materials Inc. (NYSE:WFR) lowered its revenue forecast, which sparked a drop in the solar silicon wafer maker. Also, Goldman Sachs downgraded their outlook for production and revenue in the auto sector. Along the auto line of thought, there were reports this morning that General Motors Corp. (NYSE:GM) and Chrysler were back in merger discussions.
Looking at the chart picture, the Russell is back within striking distance of key resistance at 491, which turned back the market twice before. However, we now see a little triple top near that zone, and history tells us that triple tops are far less powerful than double top formations. For today’s trading, resistance is at 491, then near 504 and from there at 514.50. If the market stalls, then look for support at 473, then at 461.
