Wag The Dog

Good morning. The tail continues to wag the dog as premarket futures indicate were going to see a very strong start following strength in overseas markets, particularly in the Hang Seng and Nikkei. Meanwhile, retail sales reports were relatively unimpressive with a number of stores offering up disappointing results (see AEOS, ANF, CHS, COST, DDS, FD, and LTD). Fortunately, weekly jobless claims fell 10,000 to 328,000, a smaller decline than expected.

Premarket trading is showing some heavy buy interest in a variety of stocks (MAMA, CWTR, SMDI, SMSI, SNDK, WTSLA, LMRA, RMKR, ONSM, NHWK, CHINA, ESRX, FSLR, AMKR, AMAT, TIVO, RMBS, KLAC, AKAM, ASML, CRXL, NCTY, ZVUE) while it is difficult to find many premarket losers (HEPH, ALLB, FMT, DESC).

Although they were unable to take out the S&P 1400 level yesterday, premarket futures currently indicate that we'll take it out at the open. How the market responds to that and whether we see any followup momentum is important. I expect the gains to fade following yesterday's session, but admittedly I have little to support that view. It's just difficult to justify a very positive day without having better headlines to work with. Have a terrific Thursday!