Mid-Day Summary

Friday, May 23, 2008

Mid-Day Summary: Major averages are trading near session lows

The stock market opened modestly lower this morning and continued this week's negative bias, trending lower over the first two hours of the session. July crude oil ($131.33 +0.52) was at its best level of the morning shortly after the open ($133.71), but for once the major averages did not mimic crude as it also sold off, basically flat on the session at midday. During the sell-off in equities, today's only piece of economic data came out, though it was largely in line. Existing Home Sales fell 1.0% in April to 4.89 mln, slightly above the 4.85 mln consensus, though the prior month's reading was revised slightly higher to 4.94 mln from 4.93 mln. Since hitting their morning lows around 11:30ET, the major averages attempted to rebound over the next 30 minutes, but failed and are trading back near lows at midday. With a long Memorial Day weekend on the horizon, the afternoon is expected to see extremely slow trade. Dow is currently -147 to ~12480; Nasdaq is currently -29 to ~2436; S&P is currently -19 to ~1376... Technical Perspective: The major averages are all sitting near session lows moving through midday. All averages have put in fresh weekly lows, breaching the Wed. intraday lows while the Dow (INDU) and S&P 500 (SPX) have made fresh monthly lows. We may see further downside as moves can become exaggerated with volume drying up ahead of the long holiday weekend. Market internals remain very weak with NYSE TRIN @ 1.90 and the A/D line @ 0.30:1 advancers to decliners. The Bond market traded higher in overnight trading, and trended higher in choppy trading since pit trading opened. The 10-yr is currently +21/32 3.829%... In Commodities, July crude ($131.33 +0.52) appeared to recoup all of yesterday's losses, but heading into the afternoon it has sold back off to right around unchanged. Overnight and early morning sessions saw crude slowly churning higher, touching $133.71, before seeing this profit taking ahead of the three day weekend... In Europe, European oil and mining stocks fell as the crude oil traded below its recent record high and investors worried that regulators might block consolidation in the mining sector. FTSE closed -1.5%; DAX closed -1.8%; CAC closed -1.9%... Note in Asia, the Nikkei closed +0.2%, the Hang Seng closed -1.3% and the Shanghai Composite closed -0.4%... On the Earnings calendar, 0 cos are confirmed to report today after the close. Tuesday before the open, 2 cos are confirmed to report... On the Economic calendar: nothing remains on the schedule for today, nor is anything scheduled on Tuesday before the open.