Russell seen higher as bank stocks rule the roost
Small-cap stocks are expected to open higher, still riding a wave of better-than-expected earnings results, while basking in the glow of a sharp pullback in crude oil prices this week. The Russell 2000 (NYSE:IWM) was up sharply in after-hours trading, well ahead of the pace in other index products and is expected to open near 700.50.
Although crude oil prices have collapsed some $16 dollars a barrel this week, they were higher overnight, rising about $1.50 dollars back above $130, which is no surprise ahead of a weekend. As long as crude oil doesn’t rally much more during the session today, it should allow investors to focus on earnings numbers.
Speaking of earnings, the news on major large-cap issues was mixed overnight, but traders seem to embrace the good news over the bad. The good was highlighted by Citibank (NYSE:C), as the nation’s largest bank posted a smaller-than-forecast loss and jumped well over 5% in overnight trading. Also, Schlumberger (NYSE:SLB) was up about 3% as revenue topped expectations.
As for the bad, Merrill Lynch (NYSE:MER), the third-largest investment bank, tumbled about 3% overnight when earnings disappointed. Also, tech stocks Google (Nasdaq:GOOG) and Microsoft (Nasdaq:MSFT), were down in after-hours trading when earnings missed the mark, and the tech-laden Nasdaq was noticeably lagging Dow and S&P 500 futures ahead of the opening.
There was a Wall Street Journal story this morning saying that Freddie Mac (NYSE:FRE) might opt to raise some $10 billion in cash, which pulled down the government-sponsored mortgage firm overnight. Heading toward the open, FRE was off about 4%.
Looking at the chart structure, today still appears to be an important session just to make sure that weekly studies remain on track to sustain the bullish reversal off move lows. From a short-term trading standpoint today, resistance comes in at 701, then at 707.50. There is a little resistance vacuum above the latter up toward 717.50. Meanwhile, on the downside, support is pegged at 690, with the key spot at 684.50.
