Morning Call : October 18, 2012

Futures:  

In line with what I wrote last night, futures are down across the board. Nasdaq future is the weakest, down over 13 points. Dow future is also down about 13 points and /ES down 4.5 points. Most likely these red numbers will increase before the open. Surprisingly, the futures were flat for the overnight session and it now seems that when folks at NY TBTF banks have started their day at 8.30 eastern, the futures started to move down.

As I had reported last night  http://bboptions.blogspot.ca/2012/10/ideas-for-night-october-17-2012.html there were higher put activity on SPX and higher call activity on VIX yesterday. This would indicate that those in the know are hedging for a bit of downside.

I am not sure how far the correction will go but knowing that the up momentum has been very strong and cycles are up till October 24-25, I would be hesitant to short the market.

Commodities:

US Dollar index is up about 0.2%. Gold & silver is down almost 1% while crude is down about 0.64%. However Nat. Gas refuses to go down and is stubbornly holding on to $3.50 range. I think more action will be on the equity side today.

Earnings & Economic data:

Today's economic notables include weekly jobless claims, the Philadelphia Fed's manufacturing index, and the Conference Board's index of leading economic indicators. Google (GOOG), Microsoft (MSFT), The Travelers Companies (TRV), Verizon Communications (VZ), Advanced Micro Devices (AMD), Alliance Data Systems (ADS), BB&T (BBT), The Blackstone Group (BX), Boston Scientific (BSX), Capital One Financial (COF), Chipotle Mexican Grill (CMG), Cypress Semiconductor (CY), E*TRADE Financial (ETFC), Fairchild Semiconductor (FCS), Fifth Third Bancorp (FITB), Huntington Bancshares (HBAN), KeyCorp (KEY), Morgan Stanley (MS), Philip Morris International (PM), SanDisk (SNDK), Southwest Airlines (LUV), SUPERVALU (SVU), and Union Pacific (UNP) will unveil their respective earnings reports.

(H/T Schaeffersresearch).

Conclusion:  Same as yesterday. The markets will seek lower level but no reason to be a bear.