Any trader will tell you that buying a reflexive snapback the morning after a big selloff like the 3.9% doozy we saw
yesterday is not a good idea. Those kinds of rebounds rarely hold. Best wait for the sellers to come out and flush things out on the downside.
Well, you won't have to worry about that problem this morning. The downside flushing will start when the opening bell rings and a wave of global selling hits U.S. stocks.
With Asian markets tanking overnight and the large European bourses all down more than 2%, the futures are feeling the pressure. At 9 a.m. EST, the
futures were down 12.4, about 8 points below fair value and pointing toward a pretty bad early trend for the broad, big-cap market. Tech won't escape that pain -- the
futures were lately down 53 points.
"It's going to be choppy for the next several days," said Rob Cohen, co-head of listed trading
Credit Suisse First Boston
. "It will be interesting to see how the quarter ends tomorrow and how that affects the manipulation of positions."
It will also be interesting to see where the early selling bottoms, particularly in tech. A big early dip would send the
Nasdaq Composite Index
, which is already down 6.4% this week, toward 4500, a support level it's been able to bounce off firmly twice in the past two weeks. There are only so many times you can test support before it becomes resistance, though.
Buying the Dips
"I'd imagine that, excluding any giant preannouncements today, we just peter around with this back-and-forth movement between the S&Ps and the Nasdaq," Cohen said.
The morning's biggest premarket movers are
. Seagate was trading at 74 3/4 on
on last night's news that it will go private in a complicated deal involving Veritas and an investor group led by
Silver Lake Partners
. Seagate finished New York trading at 62 3/4 but ended late composite trading at 74. Meanwhile, Veritas, which is buying back Seagate's 33% Veritas stake, was trading at 160 from a close of 142 1/2.
The negative outlook for equities was helping the bond market inch higher, with the 10-year note up 5/32 to 102 23/32 and yielding 6.128%. The only significant economic data out today is the final revision of fourth-quarter
gross domestic product. Revisions of economic data generally don't move markets much. But this one could turn a few heads -- GDP was revised up to a whopping 7.3% from the previous estimate of 6.9%.
Stocks were solidly lower across the pond in afternoon trade. The London
was down 164.7, or 2.50%, to 6434.1. On the continent, the Paris
was off 181.70, or 2.8%, to 6323.78, while Frankfurt's
was down 191.50, or 2.4%, to 7673.26.
The euro was trading at $0.9542.
After two days of big gains in Tokyo, most investors booked profits in bank shares and other blue-chips, sending the
index fell 265.15 points, or 1.3%, to 20,441.50. The banking sector was being pressured by news that the
Tokyo Metropolitan Assembly
will pass a bill that slaps a 3% tax on financial institutions' gross profits.
The dollar inched down to 105.55 yen, as currency dealers speculated that another
Bank of Japan
intervention to prop up the dollar could emerge around the 105.00 yen level. The greenback was lately sitting at 105.17 yen.
The real damage took place in Hong Kong, where a tech and telecom selloff sent the
down 629.22, or 3.5%, to 17,467.15.
For a look at stocks in the preopen news, see Stocks to Watch, published separately.