STOCK INDEX FUTURES: Rebound After Monday's Losses
August 09, 2011
By Debbie Carlson
a sharp loss on Monday, September S&P 500 futures
at the Chicago Mercantile Exchange are firmer in early
dealings on Tuesday.
rebound doesn’t surprise Shawn Hackett, president, Hackett
Financial Advisors. He said it’s natural to see the
market come back given the sharp drop in equities over
the past few days.
you have such a one-sided trade—there are not many times
when markets fall 15% in matter of days, that for the
very short-term we could see a rebound and a sizable
one at that,” Hackett said. Since August 1, September
S&Ps have lost about 12% of their value as of Monday’s
stressed that fundamentally the equities and the broader
economic health of the U.S. has far to go for any sustained
rally, but he said eventually markets run out of selling
and then can rebound.
FOR SUPPORT NEAR RECENT LOWS
have fallen to their lowest levels since September 2010,
but Hackett believes that the bloodletting is mostly
over for the very short-term.
S&Ps have fallen as far as 1077 overnight, but have
rebounded in the early day session. He is watching the
1125 area as a possible base-building region. That area
represents where the market put in a reverse head-and-shoulders
pattern, with the two shoulders around 1125 and the
head at 1100, based on a weekly chart, between June
and August 2010. If the market can bottom, he said a
100 point “dead-cat bounce” rally could be seen this
week. While that sounds like a sharp snap back, he said
it’s not so significant considering the break the market
resistance he said the 200-day moving average, which
comes in around 1275, could act as a temporary ceiling.
Federal Open Market Committee meets today to set monetary
policy. While no change is expected in interest rates,
considering the downgrade of U.S. debt by S&P and
continued economic turmoil in Europe, market participants
will be watching closely for cues on what to expect
next from the Fed.
market really wants to know what everyone’s plans are,”
economists said the Fed could announce actions in light
of the recent market turmoil and downgrade. Barclays
Capital suggested the Fed could make additional asset
purchases, modifications to the "extended period"
language, or a further modification to the existing
data this week is light. Reports of note include the
producer and consumer price index reports on Wednesday
and Thursday, respectively.