Soft opening expected for small caps
Small-cap stocks are expected to open slightly lower Tuesday, in line with mild declines in after-hours trading. The Russell 2000 (NYSE:IWM) was down about 0.3% overnight, which would translate to a cash opening near 716. Look for initial support for the Russell this morning at 714, then at 709 and 705. On the upside, resistance remains near 724, then at 731.
The market’s pullback Tuesday was confined to an inside session move, and was consistent with a mild overbought correction. As long as the market doesn’t sink through 709, it won’t endanger the advance from late last week.
Stock indices around the world were narrowly mixed overnight, with Japan’s Nikkei down 1%, Hong Kong’s Hang Seng up 0.8% and Europe markets slightly mixed depending on the nation. The U.S. dollar was flat to soft overnight, crude oil remained bid amid strife in producing country Nigeria, a refinery strike in Scotland and a Japanese tanker being fired on off the coast of Yemen.
Existing home sales are due out at 10:00 a.m. ET, which serves up the first glimpse of economic data so far this week. Later this week we’ll get further data on New Home Sales and Durable Goods, but the economic calendar is extremely quiet this week.
Given the quiet economic front, traders continue to focus on earnings news, which was also mixed into the stock market opening. The big reports so far after yesterday’s close came from Texas Instruments (NYSE:TXN) and DuPont (NYSE:DD). Texas Instruments missed the estimate and was down almost 3% overnight, while DuPont earnings were solid, and the stock was up about 0.3%.
If investors run with the overnight themes that are in play at this stage, then tech shares could be under pressure today, while commodity markets come into buying interest.
Small-caps set to release earnings this morning include Sterling Bancshares (Nasdaq:SBIB), Sterling Financial Corp. (Nasdaq:STSA), Deltic Timber Corp. (NYSE:DEL), Overstock (Nasdaq:OSTK), and Journal Communications (NYSE:JRN), all at 11:00 a.m. ET. Community Bancorp (Nasdaq:CBON) comes out at 11:30 a.m. ET.
