Opening slip seen as financials, commodities slump overseas
Small-cap stocks are expected to open lower, extending Monday’s slide following a decline in stocks around the world overnight. Financial and commodity shares were under pressure overseas, a theme that could easily spread into U.S. markets this morning with crude oil down and Dow component Alcoa Inc. (NYSE:AA) saying it will reduce aluminum capacity because of soft demand. Stock index futures were off about 1.5% this morning, suggesting a Russell 2000 (NYSE:IWM) opening near 486.
Crude oil prices briefly dipped below $60 a barrel heading toward the U.S. opening, and were off more than $2 from Monday’s close, setting a soft tone for energy shares early today.
Emerging markets were taking a hit this morning, with stock markets in Russia slipping 9% at times overnight, while shares in Dubai (which has been exploding in growth in recent years) off 7%. A global stock index was down about 1.7%, with Europe off in the 2% range approaching the U.S. stock market open. Although stock market trading and futures markets will be open in America today, cash bond trading, banks and government offices will be closed for the Veteran’s Day holiday, which could thin out trade in equities.
The chart structure deteriorated Monday as the market failed early on our resistance zone near 514.50 and then eroded throughout the session, sinking late through a decent intraday support line near 495. Persistent action below that point today would suggest further downside probing. The next mild support points to watch today are at 484, then at 475. If the market can mount a recovery rally and push back through 495, then there is resistance at 505, then 514.50.
