The market has been stuck these last couple of months between 1215 and 1275 on the
. In the second half of last week, stocks went from the bottom of that range to the top of it.
That's a big move -- nearly 5% from Wednesday's intraday low to Friday's close. After traveling that far, one would expect stocks to take a pause. But the strength of last week's rally, and the government's announcement today it had settled with
ahead of the antitrust trial with the chip giant, suggests the market is ready to break free from its two-month rut.
"For the first time in a long time, we had decent internals," said Todd Clark, head of listed trading at
. The strong advance/decline line, good volume and participation by a ton of different groups suggest that the market may be broadening. "They closed them on their highs," said Clark. "It looks like they're going to keep them going a little bit."
Yet Clark wonders if the market will have the strength to push through its ceiling today. The thing he's watching is the March S&P 500 contract, which has consistently stalled out at about 1290. "We're going to try to get back up into that zone," he said. "I don't know if we're going to have enough juice to get through it."
Even if it doesn't crack that ceiling today, anticipation of a breakout will probably limit any downside in the market. It also helps that the Treasury market is behaving and that a string of mergers got announced this morning. It helps too that, here in the midst of confession season, there aren't any new earnings warnings from name-brand companies.
At 9 a.m. EST, the S&P 500 futures were up 1.5, about 3 above fair value and indicating some strength at the open. The 30-year Treasury was up 9/32 to 95 4/32, dropping the yield to 5.59%.
Tokyo stocks reached their highest levels in over three months before profit-taking and pressure from firms unwinding cross-shareholdings took them lower. The
closed at 14,779.05, down 114.95.
Hong Kong stocks edged lower as the market there digested its recent gains. The
dropped 22.87 to 10,263.99.
European stocks were mixed. In Frankfurt, the
was down 19.01 to 4820.08. In Paris, the
was down 1.13 to 4188.43. But, in London, stocks had edged their way into positive territory. The
was up 12.3 to 6217.8.
Monday's Wake-Up Watchlist
Federal Trade Commission reached a deal with
Intel (INTC) - Get Report the day before the antitrust trial against the chip maker was scheduled to start.
Allied Waste (AW) is acquiring
Browning-Ferris (BFI) for $45 a share, a nice premium over its Friday closing price of 34 3/4. The deal's total value is $9.1 billion, which includes the assumption of $1.8 billion in debt. The deal will create the second-largest solid waste services company in North America, with about $6.6 billion in annual revenue and a national network of landfill, collection, transfer, recycling and other operating assets. The combined company, which will be called
Allied Waste Industries, will be led by Allied Waste's current senior management team.
CIT Group (CIT) - Get Report agreed to acquire
Newcourt Credit (NCT) in a $4.17 billion deal that CIT said will create the largest publicly owned company in the commercial finance industry.
Fortis, an international insurance, banking and investment group, is buying
American Bankers Insurance (ABI) for $2.6 billion.
In other news:
BMC Software (BMCS) is buying
New Dimension Software (DDDDF) for $52.50 a share, or $650 million, in cash.
Homestake Mining (HM) is buying
Argentina Gold for $200 million in stock.
Lucent (LU) agreed to license
Unisys' (UIS) - Get ReportNatural Language Speech Assistant tool suite.
Seagate (SEG) expects to post a restructuring charge of between $50 million and $60 million in the third quarter.
VLSI (VLSI) amended its "poison pill" takeover defenses, making it more difficult for
Philips Electronics (PHG) - Get Report to accomplish its hostile takeover of VLSI.
Merrill Lynch was pretty quick to shoot out a report recommending
Duke Realty Investments (DRE) - Get Report after Duke last week set a merger with
Weeks (WKS) . The timeliness of the report comes thanks to the fact that Merrill's investment bankers advised Duke on the deal and supplied Merrill's analysts with info about it before the merger announcement last Monday, the Heard on the Street column in
The Wall Street Journal reported. Merrill's work in advising Duke and then endorsing the stock left some rivals grumbling about the potential conflict in the two roles, the column says. The column added that there are no regulatory problems with the practice. A Merrill spokesman is quoted in the column as saying: "Our analysts wouldn't jeorpardize their reputations and credibility with investors for the sake of promoting a banking transaction."