S&P 500 Futures Update
SHORT TERM PRICE PERSPECTIVE NOVEMBER 7, 2008
Look for SPZ to fall today early on the back of an extremely weak employment report, but recover late and into next week. Picking a bottom is dangerous, but a decline of 100 S&P points in two days in front of a payroll report hints a large dose of bearish news is priced. The market has seen a wave of selling over and is pricing a glum outlook for employment and corporate profits. More importantly, there may be a chance for the market to lift after WFC prices its $10 bln secondary, and value hunters could enter toward the bottom of the trading range. Yesterday’s rate cuts by the BOE and ECB should improve prospects for economic growth and help heal credit stress. The two banks are well behind the curve. The LIBOR and commercial paper markets are slowly returning to
normal which is also stock friendly. The bearish argument remains negative momentum to profit growth and the economy. Watch GNW as it could be a negative. DIS also reported poor theme park and ad sales.
Best guess for today’s range in SPZ: 872 to 940
Nick Kalivas
MF Global Research
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