Monday June 19, 2006
The index markets gave back a significant portion of their outsized gains from Thursday's rally. The early tone was set from St. Louis Fed President Poole's hawkish tones on the inflation front. Accordingly, buyers never really materialized and prices drifted lower...however, there was net little damage in the SPX and DJIA as bids are beginning to underpin these issues ahead of the end of a painful Q2. The selling in the NDX and Russell 2000 was more aggressive, with both indices giving back essentially 50% of their gains from Thursday. Could this be an indicator of things to come in the last two weeks of this quarter? Long large caps, short small caps?
European markets are higher, particularly the DAX as Siemans and Nokia have agreed to a merger. Siemans is up around +8% and Nokia around +4%...this merger has placed a solid bid across the Eurozone indices and has helped push the U.S. overnight market to its sessions highs. Currently, the SPU is trading at 1265.50, up 5.50 on the session. Keep a close eye on this opening...normally if the bid is based on "fluff" - in this case the Euro merger news - then we should see an early test of the opening higher gap with a trade towards the unchanged level.
This week should provide lighter volume ahead of next week's fireworks. We have little in the way of economic and earnings data to spark a move during the upcoming 5 sessions, however, next week brings earnings, the FOMC meeting and the end of Q2. Suffice it to say that the volume will flow during those events...in the meantime, keep the powder dry.
