STOCKS: The Bias is Up but Fundamental News is Very Thin
The bias is up but fundamental news is very thin Global equity markets generated more gains than losers overnight with the Chinese markets and the FTSE 100 posting half percent declines. With a higher high for the move early today the S&P has forged a very significant recovery bounce from last week's lows and that has given investors initial hope that the markets have forged an early March value zone level capable of supporting prices ahead. While not likely a major impact on prices this morning, seeing US factory orders decline could knock stock prices back from early gains. However, a slightly more bearish development (made more important by the recent jump in treasury yields) an investment fund over the weekend has indicated their focus of a new fund will be less dependent on equities!
S&P 500
As indicated already the June S&P this morning is 67 points above last Friday's spike low reversal and could be poised to regain 4100 if US factory orders for January surprise with a better-than-expected reading. In retrospect, the sharp recovery in S&P prices after last week's increased concern of rate hike inspired slowing could suggest last week's low are fundamental in nature. In fact, the last COT positioning report available was calculated with the market 116 points higher than this morning's trade, thereby indicating the S&P net spec and fund short is likely understated. The Commitments of Traders report for the week ending February 7th showed E-Mini S&P Non-Commercial & Non-Reportable traders were net short 190,170 contracts after decreasing their short position by 21,622 contracts. Key support in the March S&P today is 4034.25.
Other US Indexes
The Dow managed a higher high for the move this morning despite generally bearish analyst weekend business program coverage with some analysts warning that defensive stocks may offer little protection ahead. Perhaps Ford shares will derive some support from news last week that February new vehicle sales were the 3rd highest since January 2022. The Dow might also garner some support from a weekend story touting Fords increased marketing of data generated by trucks and vans in Europe. As in other stock index markets the Dow futures remain net spec and fund short with those net spec short readings likely dramatically understated into last week's low. The February 7th Commitments of Traders report showed Dow Jones $5 Non-Commercial & Non-Reportable traders reduced their net short position by 3,739 contracts to a net short 8,342 contracts. Critical support in the March Dow futures is 33,273. Seeing the NASDAQ post an upside new high for the move extension this morning, following news of price reductions in key Tesla models indicates the market is leaning bullish to start. However, chip sector maneuvering by both China and the US governments should keep tech sector investors cautious. The Commitments of Traders report for the week ending February 7th showed Nasdaq Mini Non-Commercial & Non-Reportable traders were net short 31,603 contracts after decreasing their short position by 2,570 contracts.
Today's Market Ideas
The path of least resistance is up but macroeconomic sentiment is barely holding sway against residual concern generated by the sharp February washout.