Equity Futures: Dow -21.00. S&P -1.40. NASDAQ +1.00. Japan Nikkei +65.00. German Dax -5.00
U.S. Trade: What was expected to be a volatile day due to the release calendar being loaded with important economic reports, turned out to be a flat day, with little movement in the financial market. This was seen in the equity, currency and to some extent, even in the commodity market.
Since the day had started, the Dow Jones and the S&P 500 indexes spent most of the time near the break-even line, but around the closing bell, the major indexes started sliding lower. However, the tech-driven NASDAQ managed to outperform the two indexes aided by Comcast (NASDAQ:CMCSA), after the company announced that has struck a deal with General Electric (NYSE:GE) for NBC Universal.
The market’s resilience to the move comes as the global equity indexes are trading near the yearly highs, while mixed fundamental data has hit the newswires over the last few days of trading. Thursday trade followed the same pattern, with positive news coming from Bank of America (NYSE:BAC), which stated that it would repay the $45 billion in bailout funds. However, the news that the manufacturing sector contracted unexpectedly in November had a strong weight into the market, since it practically shows that the recovery phase is not as strong as some investors expected it to be.
S&P Technical View: TheLFB Member Charts
The price structure on the daily chart is showing two valid scenarios. On the left side of the chart, it shows an impulse structure with five waves up from the 665 lows to the current highs. If this is the case, the wave 4 discussed on the weekly chart, below, will be rejected, since the fourth wave is a corrective wave, which means it cannot be sub-divided by a five wave move. However, in this scenario, a three wave push lower into a corrective blue wave 2, with a targets somewhere around 950 area is expected.
On the right side of the chart, we have a different picture, with a clear zig-zag correction, which is valid for a wave 4 scenario. In this case lower blue wave 5 will follow.
Overall, the current price structure signals for a coming turning point around 1120 area with at least three wave push lower, since the market is trading around the top of wave 5 or wave C leg.
Economic Moves: The financial sector together with the basic materials were the biggest drag on the market in Thursday's U.S. trade. However, some of these declines were offset by the upward trend observed in the telecommunications and in the utilities sector, both up approximately 0.90%. Interestingly, the utility sector was also among the top performers of the market in Wednesday trade.
The most active company in the U.S. market was Bank of America, which for the first time in a long period, managed to dethrone Citigroup (NYSE:C). The surge in BofA’s trading volumes was caused by the surprise announcement that the bank will repay the bailout funds, worth approximately $45 billion. Bank of America gained 1.10%, and was the only major bank that advanced in intra-day trade.
Comcast was also among the most traded companies on Thursday, after it was announced that the company will take a majority stake in NBS Universal. Following this announcement, Comcast jumped 6.5%, being the second best gainer in the S&P 500, after Advanced Micro Devices (NASDAQ:AMD).
Crude oil was recently trading at $76.25 per barrel, lower by $0.30.
Gold was recently trading higher by $6.50 to $1220.50.
Treasuries were sold on Thursday, even as the ISM report came in much weaker than expected. The sell-off was caused by the Treasury announcement that next week $74 billion worth of notes and bonds will be sold.
Disclosure: No positions