No replies to this topic

[TTHQ Staff]

Equity Index Update Wednesday April 26, 2006 The index markets continued their recent downdraft yesterday as the indices focused on the sharp rise in long dated treasury yields. All told, the large caps felt the brunt of the pain, while a large buy program near the close of trading brought unchanged readings for the Russell 2000 and Midcap 400. Today's action should be dominated by the current downdraft in the long end of the curve after a much stronger than anticipated reading in March Durable Goods orders. The reading sent the bonds significantly lower...even after a bounce back from the trading lows, the 10 year and 30 year are trading at yields above yesterday's highs. In addition, the market will look at New Home Sales, the DOE stats and at 1:00cst the Beige Book. The indices clearly seem to be at a crossroads given their recent divergences. The NDX is barely holding above 1700 and has been unable to gain any ground back from Friday's vicious selling. On the flip side...the large caps remain below Friday's highs, but, have been able to hold their bid at lower trading levels. Seemingly there has been some rotation out of the small caps over the past couple of sessions. Yet, it reamins unclear as to whether that money is being put to work elsewhere or is moving to the sidelines. The answer to this question will determine our next leg in this market. The breadth over the past two sessions has been bad...not as bad as a quick glance at the NYSE UP/Down readings would have you believe due to the amount of fixed income issues that are listed on the exchange. That being said, we have seen moderate deterioration in the operating company only breadth readings - however, nothing to be overly concerned about given our current levels. As I wrote earlier...crosscurrents. At current levels, it appears to me that the market is ready to make another move to the upside into the end of April...however I have lots of lingering doubts and the simple fact is this - this has not been much of a dip to get long into, which begs the question - can we go lower and produce a better entry? The answer of course is yes or who knows...but, it seems to me that at current levels, the crowd is behind the market and looking for more upside. It seems hard to fight liquidity and when you factor in all the negative headline news over the past few sessions the market remains firm. Good Trading to All, Brad Sullivan