Futures Follow Europe Higher, Banks Lead the Charge

US stock futures again point to a higher open on Wall Street Thursday as the market looks to tack on additional gains into Christmas. Stocks had been week until Tuesday, when a higher opening triggered a short squeeze and dip buying, sending the S&P up 3%. The action yesterday was a bit disconcerting for the bulls as we probed some of yesterday’s move, but a late day rally sent the Dow and S&P into positive territory, even though the Nasdaq fell 1% follow Oracle’s (ORCL) earnings miss.

In Europe, banks are big gainers this morning as investors continue to digest the ECB’s decision to extend record loans to the regions financial institutions. The move highlights the dire straits that the banks currently find themselves in, but should allay fears of a meltdown of the financial system. Initial indications yesterday were that the market was not encouraged by the move. However, yesterday’s afternoon rally and the higher open this morning suggest that determination has changed a bit.

Jobless claims data also continues to improve, falling again this week down to 364,000. We have started to see a bit of a decoupling of the US economy from its European counterpart, as the data trend at home has been a positive one.

TECHNICAL TAKE

Yesterday was gut check time for any traders trying to hold for a multi-day move. Tech was hit hard as Oracle’s earnings were a big disappointment. There was collateral damage throughout that sector. Around mid-day most of those stocks had a nice move off the lows and off the supports I listed around lunchtime. The S&P and Dow did hold in much better and the new fledgling rally remains intact. It will be a “have” and “have not” tape as we go into year end. So make sure to watch the price action close as there is pain and broken patterns in some of the usual names that some thought were safe.

Today the futures are up a bit as Europe is positive and we are seeing some continuation to the afternoon reversal. Next area of resistance is 1248-1252 (this is attainable today)
Then the 200 day at 1259 (Breaking above and closing above this is a stretch).
Support is 1229-1232 and then 1222-1225.

Apple (AAPL) showed a lot of relative strength yesterday and seems like it wants over $400 for Christmas. It had a nice buy yesterday as we outlined the 50day at $392 as a good level to hold and potentially buy the dip.

Google (GOOG) is still sloppy up here but as long as it stays above $620-$625 perhaps we get an ignition soon if we can close above $632-$635.

Amazon.com (AMZN) is very ugly. Traders leaned short yesterday and had some success. It is in the process of correction as it triggered a Head and shoulders pattern and can’t reclaim the neckline. This stock pattern measures a move down to the $135 area.

Baidu.com (BIDU) is still acting weak and $110 support is the pivot to trade against. Some will short if we can break and get below it.

VMW-CRM-IBM-SAP all had very damaging days after the Oracle news. They gave some signs to lighten up in last month or so, and then yesterday pushed them off a cliff. Now it’s a bit too late if you suffered through. Some will trade them vs. yesterday’s low. Perhaps there will be a trade for cash flow if a stock like ORCL can trade into its gap around $26 for cash flow. Use that gap as a pivot and strategy to see if they can reclaim some of it.

Banks acted well yesterday afternoon, and they still have some upside room if they want to continue the bounce. These bounces have been tricky.

I’m going with Goldman Sachs (GS), that I think it can see $94-95 before it meets some resistance.

Refiners and Ags also did act a bit better yesterday.

Disclosures: Scott Redler is long SPY GOOG AAPL GS CAT

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