US stock futures continued their climb overnight and are set for a slightly higher open. Investors are still expecting an imminent deal in the Greek debt saga that will pave the way for a new bailout package. Greek Prime Minister Lucas Papademos is expected to meet with his coalition government today to sign off on a proposed deal. Some European finance ministers have issued some tough talk about the Euro zone’s ability to move on without Greece, but would like to avoid such a messy scenario if possible.
Also helping to buoy the market in 2012 has been strong employment data in the US and more dovish talk from the Federal Reserve. Yesterday Fed Chairman Bernanke testified before Congress that Friday’s strong jobs report would not alter the FOMC’s plan to keep rates ultra low until at least 2014.
Earnings season continue on this week and we had a few big name reports in the last 24 hours. Time Warner (TWX) is up more than 3% in the pre-market after topping both EPS and revenue estimates for the fourth quarter. In contrast, Walt Disney (DIS) is down about 1% after falling short of revenue estimates. CVS Pharmacy (CVS) is up about 2% after also surpassing expectations.
Overseas markets were mostly up as this rally continues. The bull move that started on December 20th is now 33 sessions old. As it continues some grow skeptical, as some market participants overthink or overtrade” in these elevated levels. I was guilty of that a little bit yesterday.
Being prudent/disciplined is one thing, being stubborn and opinionated is another. If this rally goes another 30 handles to take us to last year’s high of 1370 in the S&P, there will be a lot of traders in the “Pain Trade”.
If you have short on the brain make sure to do it with a plan. The rotation continues and sectors have been pausing vs. correcting. Lots of stocks continue to set up well. We will see when this changes, because this is what I do!
The S&P hit 1349 yesterday, which is now a pivot to trade against, and is starting to enter another zone around S&P 1347-1356. Last year’s high is 1370.
Disclosures: Scott Redler is long SPY, OIH, SLB, AIG, JPM, DRYS, DNDN, QCOM, VMW, LULU, WMT, DRYS, MCP, DNDN calls, Long VXX. Short DIA, QQQ.