STOCK INDEX FUTURES: RALLY ON BOJ RATE CUT, HOPES FOR
MORE GAINS IN OCTOBER
October 05, 2010
By Debbie Carlson
ending September with its strongest gains in some 70
years, traders are looking to October with hopes that
the gains will continue, but wary of what October can
bring to stock indexes.
S&P 500 stock index futures at the Chicago Mercantile
Exchange are higher on Tuesday, supported by a rate
cut by the Bank of Japan and the Royal Bank of Australia
holding the line on raising interest rates.
market is shrugging off Monday’s weakness which in part
came after aluminum giant Alcoa was downgraded by Deutsche
Bank, a disappointing sign for the bulls. Alcoa, which
is due to release earnings Thursday, is often seen as
a bellwether for the market. While there is more optimism
on Wall Street, not everyone shares it.
Hackett of Hackett Financial Advisors said the market
has been rallying on expectations the Federal Reserve
will enact another round of quantitative easing, but
if the Fed doesn’t do it the stock market will likely
experience a sharp sell-off.
also noted the mixed action of financial markets – while
stocks are rallying on optimism for another round of
stimulus, the Treasury market continues to act as if
the economy remains in trouble and gold has been rallying.
Normally these markets do not act in tandem, which could
be a sign that at least one of them is due for a break.
a very unusual environment,” Hackett said.
DATA ON TAP THIS WEEK
non-farm payrolls report is due for release Friday and
will be the last one until the mid-term elections.
bullish news is expected out of the report. Hackett
said given the lackluster economic news such as naggingly
high unemployment, he doesn’t see how stocks can continue
some point the fundamentals will surface,” he said.
He noted some markets like the grains, which rallied
sharply this summer, have started to back off those
highs and sometimes it takes a break in one market to
spread to another.
POINTS TO WATCH
far December S&Ps have consolidated under the 1160
area, which Hackett said is likely strong resistance.
Support is seen at 1120, a strong band of support from
August. A break of that area “could open the floodgate”