Stocks seen flat to up slightly
U.S. stocks are expected to start the week out flat to slightly higher, underpinned by gains in commodity stocks following overnight advances in crude oil and gold. Energy markets were lifted by geopolitical tension in the Middle East following three days of air strikes in Gaza by Israeli forces. Merger activity in Asia lifted insurers and tech stocks, while automakers were firm in Europe, but the cancellation of a big joint venture between Dow Chemical Co. (NYSE:DOW) and the Kuwaiti government could pull the rug out of plans Dow had to purchase Rohm & Haas Co. (NYSE:ROH), which hurt both stocks in pre-market trading. The Dow was expected to open about 25 points higher, while the Russell 2000 (NYSE:IWM) was seen opening up 0.3% near 478.00.
Crude oil prices rose more than $3 dollars a barrel in overnight trading as Israeli warplanes hammered the Gaza Strip and as Israeli forces appeared to be preparing to launch an invasion. Gold prices climbed to 11-week highs as the Middle East tensions escalated. Within the commodity theme, grains markets were called sharply higher and the U.S. dollar was off a whopping 1.75% against the euro ahead of the stock market opening.
Stock markets in Europe and Asia were up modestly overnight, which could provide a minor lift to U.S. equities. Europe was up about 0.4%, striving to snap a 6-day losing streak. In Asia, Japan was up just a tad, while Hong Kong was up 1.0%, Australia up 1.0% and Singapore up 3.1%.
The chart picture retains a flat, consolidation structure after last week’s range was the tightest since the collapse began back in mid-September. More of the same could be on tap this week as the market limps along through another holiday-shortened trading week. For today’s trading, look for resistance at 481, but the key upside zone is still at 491 up to 497. Meanwhile, support comes in at 464 and 452.50.
