Things looked bleak overnight, as equity futures were sharply lower after no positive weekend news out of Washington. However, as we’ve seen seemingly every day, buyers stepped in and have pushed stocks higher yet again. Near their lows, S&P 500 futures were off about one percent overnight, but stocks now sit in the green on the day. There are multiple important meetings set to take place among legislators today, and it appears that traders are viewing this as constructive. Equities are being led by technology and small caps today, as the Russell 2000 and Nasdaq are each about 0.3% higher. The S&P 500 and Down are lagging slightly, each up about 0.1%. Bond markets are closed today, but ETFs that mimic bond price action are selling off sharply, down over 1% for the day. Gold and silver are both slightly higher today, each by less that one percent.
CHART OF THE DAY
MBIA (MBI) – Shares of the insurance concern are higher on the year, but have been sliding since it received positive news in May regarding an ongoing lawsuit with Bank of America. Despite about a 40% selloff from the highs, however, MBI is still up by over 25% for the year. The shares are currently attempting a bounce near the 10 level, site of very heavy put open interest and also around the massive move seen earlier this year. This could act as a layer of support going forward. Despite its outperformance, sentiment in the options market is near a bearish extreme. Should MBI find some footing here, this creates the potential for future bullish unwinds, which could act as a tailwind going forward.
I like a long entry here with a stop on a close below $9.50. I would initially target a move to $12.50, with $15 as a stretch target.
WHAT I’M EXPECTING
The bears just can’t seem to take the reins and move this market significantly lower for any period of time. That said, we’re back above 1700 on the S&P and the Russell 2000 is attempting to make fresh all-time highs today. Barring any very negative news(i.e. a U.S. default) this week, stocks look poised for more upside. There is a good deal of headline risk with this related event, so be careful getting overextended on either side of the market.