1:40pm (EST)
The bulls are looking to extend their winning streak to three straight sessions and have a pretty good lead heading into the second half of trading. Futures were pointing towards a higher open this morning despite some disappointing economic data ahead of the bell.
The Empire State Manufacturing Index showed further contraction by falling to -7.7 from -3.8 in July. Wall Street was looking for an improvement to -0.4. Elsewhere, the National Association of Home Builders reported the August Housing Market Index came in at 15, which was in-line with expectations.
The bears have done a lot of technical damage over the past few weeks but the bulls are chipping away at resistance and looking for bargains. Volatility has been subdued but we doubt we have seen the last of it.
There are a lot of stocks trading at discounts and we knew there might be some M&A activity moving forward. Companies have been hoarding cash and this might be the perfect environment to go shopping if we have indeed seen a bottom in the market.
Google (GOOG, $553.50, down $10.27) unlocked its coffers and shelled out $12.5 billion to buy Motorola Mobility (MMI, $38.22, up $13.75) for $40 a share. It was a deal Google had to do to protect itself from ongoing legal challenges and will give the company access to Motorola’s 17,000 patents related to wireless technology.
As far as the market is concerned, here is how we look:
The Dow is up 153 points to 11,422 and is at its highs for the day. We were looking for a run past 11,350 today and if this level holds into the close, the bulls will target 11,600 next.
The S&P is higher by 16 points to 1,195 and has traded to a high of 1,199.60. The index is having trouble with the 1,200 level which we said would be resistance. If cleared, look for a run to 1,225, possibly 1,250.
The Nasdaq is advancing 19 points to 2,527 but is the weakest of the three indexes. The index has traded up to 2,546 and we are looking for a close above 2,550 if the bulls are going to make a run back to 2,600.
The final hour of trading could be interesting as traders take positions ahead of tomorrow’s meeting between officials from France and Germany, which is in a no-win situation. Germany can’t afford to let the euro collapse because their exports would suffer. They are one of the stronger countries that continue to support the weak and everyone is expecting smooth, good news. We aren’t so sure.
We will be back in the morning with our next update but we have to go for now as we have a number of trades to cover. Subscribers, check the Members Area for the updates.
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