Overnight Markets: Looking for Direction

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Includes: DIA, SPY
by: The LFB

Current Futures: Dow +18.00, S&P +1.80, NASDAQ +4.00

U.S. futures and European markets advanced a few points during the overnight session, however the market is confronting the same problem as in the last few weeks of trading: a general lack of momentum. Almost every stock market in Europe initially headed higher, but none advanced more than 1%, and all look capable of easily retracing the moves.

S&P futures managed to break above the 1007.00 area during the London open, but since then, have posted only small gains of approximately 0.3%. The 1007.00 area was the main intra-day resistance on Monday, and held the index, during both the cash and after-hour trading sessions. A break above this level will denote the market’s positive outlook; however a reversal looks just as likely right now.

The European markets followed a similar Asian pattern on Tuesday, with the German Dax advancing from the first few minutes, up to the 5445 area, the resistance point of the prior cash session. Despite some, albeit weak, attempts to move higher, it failed to follow through. The U.K. FTSE gapped above Tuesday’s high, and is now trading near the 4740 area, which represent the highest value touched since October 2008.

The biggest gainers in the German Dax were the financials, together with the carmakers, after the two dragged the entire market lower in the prior cash session,. The U.K. FTSE market was lead higher by the heavy-weight commodity stocks, as crude oil and metals posted modest gains during the European session, and after Chinese oil imports increased over the last period. The best company in the U.K. index was International Power, after it reported strong increases in its quarterly results. Interesting enough, the vast majority of companies in the European markets moved less than 1% up or down.

Overnight, the U.K. FTSE gained 18.73 points (0.40%) to 4,740.93, while the German Dax added 29.76 points (0.55%) to 5,447.99.

Crude oil for August delivery was recently trading at $70.90 per barrel, higher by $0.30.

Gold for August delivery was recently trading lower by $1.60 to $946.50.

Disclosure: No positions