By Anora Mahmudova and Barbara Kollmeyer, MarketWatch Strategist
says a short-term correction is coming
NEW YORK (MarketWatch) -- U.S. stock prices edged higher,
boosted by better-than-expected quarterly results, from the likes
of Wal-Mart Stores Inc., and reports of a few high-profile mergers,
including Berkshire Hathaway's move to purchase battery maker
Duracell.
The S&P 500 (SPX) and the Dow Jones Industrial Average (DJI)
hit intraday record highs in early trade. The Nasdaq Composite
(RIXF) advanced to the highest levels in more than 14 years.
Record levels on the S&P 500 is sparking a debate among
strategists, who have been consistently talking about the index's
fast recovery from the pullback last month. In just 12 sessions,
the index, which fell nearly 10% on an intraday basis, has bounced
back from the bottom it hit on October 15. 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 without 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 1key
psychological barrier of 2,000, he said.
For the Dow industrials, Al-Hammoury is 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 number of people who
applied for unemployment benefits last week posted the biggest
increase in two months, but initial claims are still exceedingly
low amid an uptick in hiring and relatively few layoffs.
Next on the data calendar are 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
rose (WMT) after third-quarter earnings and sales beat
forecasts.
Kohl's Corp. fell (KSS) after sales and earnings missed
forecasts for the third quarter. Nordstrom Inc. (JWN) will also
report. Read Movers & Shakers
Shares of J.C. Penney slid (JCP) after third-quarter sales
missed already reduced expectations, though its loss was smaller
than expected.
Cisco Systems Inc. (CSCO) initially fell, but rebounded and was
trading higher after the network-technology company posted a profit
fall.
Viacom Inc. (VIA) rose 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 16% 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 fell.
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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