By Barbara Kollmeyer, MarketWatch Strategist says a short-term
correction is coming
MADRID (MarketWatch) -- Stock futures tracked global markets
higher on Thursday as investors readied for weekly jobless claims
and focused on retailers such as Wal-Mart Stores Inc., but
strategists continued to voice concerns over a potential correction
for stocks.
DreamWorks Animation SKG Inc. surged in thin premarket trading
on deal talk, while J.C. Penney Co. fell after results late
Wednesday.
Futures for the S&P 500 index (SPX) rose 5.1 points to
2,041, while those for the Dow industrials (DJZ4) rose 41 points,
or 0.2%, to 17,618. Futures for the Nasdaq-100 index (NDZ4) gained
12 points, or 0.3%, to 4,208.
Strategists have been consistently talking about the S&P
500's inability to break through key levels. In just 12 sessions,
the index has bounced back by more than 10%. Low volatility and
bullish investor sentiment are among five red flags that the stock
market's record run is raising for some.
Nour Al-Hammoury, chief market strategist at ADS Securities,
said the U.S. market is "heavily overbought" and he expects another
short-term pullback in the next few days, especially absent of any
big economic data. Support levels to watch on the S&P 500
include 2,024, then 2,019, with a break of both leading to the key
psychological barrier of 2,000, he said.
For the Dow industrials, he's watching support at 17,408 and
then 17,350. "We still believe that the current high could well be
the last 'false' rally before the major correction, similar to what
happened after the end of QE1 and QE2. Therefore, selling rallies
remains our short term preferred strategy," he said in a note.
Read: Don't get suckered by stock market's winning streak
Need to Know: Alibaba smacks of Twitter and how to ride the
closing ramp to profits
Weekly jobless claims and retailers: The data calendar is brief
for Thursday, with weekly jobless claims at 8:30 a.m. Eastern Time,
job openings for September at 10 a.m. Eastern and the October
Federal budget at 2 p.m. Eastern.
Retailers are going to be in the spotlight, with Wal-Mart shares
(WMT) up 2% ahead of the open after third-quarter earnings and
sales beat forecasts.
Kohl's Corp. (KSS) fell 1.6% in premarket trade after sales and
earnings missed forecasts for the third quarter. Nordstrom Inc.
(JWN) will also report. Read Movers & Shakers
Shares of J.C. Penney (JCP) were off 7.2% in premarket trading
after third-quarter sales missed already reduced expectations,
though its loss was smaller than expected.
Cisco Systems Inc. (CSCO) fell over 1% in premarket trading
after the network-technology company posted a profit fall.
Viacom Inc. (VIA) could also move after reporting fiscal
fourth-quarter net profit of $732 million, or $1.72 a share,
compared with earnings of $804 million, or $1.68 a share, in the
year-earlier period.
Deal talk was driving a 21% gain for shares of DreamWorks (DWA)
after The Wall Street Journal said toy maker Hasbro Inc. (HAS) is
in early talks to buy the animation studio, citing persons familiar
with the matter. Hasbro shares weren't moving in early action.
No letup for oil prices: Crude(CLZ4) continued to fall in the
wake of comments by Saudi Arabia's oil minister on Wednesday.
Gold(GCZ4) made marginal gains, but was kept in check by the
dollar(USDJPY), which stayed well above Yen115. The yen also fell
as Japanese stocks extended a three-day winning streak, with the
Nikkei 225 hitting a seven-year high.
European stocks tracked global stocks higher, with the FTSE 100
also advancing. Read: European stocks could be gearing up for a big
rally.
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