Dartline™ First Look – morning directional planner

February 9, 2010, 7:00 am EST — The Standard & Poor’s 500 index futures up 8.40 to 1068.30, as traders are looking for signs of economic improvement domestically with positive reports on December business inventories and sales. The Commerce Department report due at 10 a.m. EST is expected to say wholesale inventories and sales each rose by 0.5 percent in December, according to economists polled by Dartline. The number is already “cooked-in,” so go with the flow. It would mark the third straight monthly gain in inventories and eighth consecutive rise in sales. Wholesale inventories are goods held by distributors who generally buy from manufacturers and sell to retailers. Meanwhile, concerns over European debt problems putting a robust 10-month rally on hold. equities on Tuesday. A spokesman for the ECB said Trichet was always planning to attend a summit of European leaders scheduled for Thursday, but the market interpreted Trichet’s departure as increasing the chances for a bailout package later this week. Concerns over how Greece, Portugal and Spain will service their debt have underlined the fragility of some euro zone countries’ fiscal positions. The euro hit an 8 1/2-month low around $1.3580 EUR= late last week but recovered slightly on Monday. It picked up further on Tuesday on speculation about a possible bailout for Greece. Analysts add that risk reversals, which indicate how volatile a rise or fall in a currency is likely to be, also shows the market is heavily skewed in favor of more euro weakness. As more traders bet the euro will fall more, some analysts warn that some retracement of recent losses is possible, particularly given that market volatility, as measured by one-month euro options EUR1MO=, is fairly high. While most in the market anticipate debt woes will keep euro sentiment negative for the time being, analysts say/point out the current momentum of euro selling is unsustainable. “The situation in Greece will be a burden on the euro for a long time, and we expect euro/dollar to be under pressure, but the positioning is very significant and makes a retracement more likely,” said Lutz Karpowitz, currency strategist at Commerzbank in Frankfurt. “‘Turnaround’ might be the wrong word as we don’t expect a positioning indicator to predict a trend reversal, but we could see a retracement,” he said, adding that a near-term rise in euro/dollar to $1.40 may be possible. … Auction of $40 billion in three-year notes, and shortly after the open wholesale inventories data for December will be reported, which is positive since the issue went as expected.

… Maintain near term resistance at 1095.40, and near term S&P 500 support at test-line of 200 ema at 1046.20.