US Equities Futures Report 05/26/2009

US STOCKS RALLY AS CONSUMERS SENSE RECESSION MAY BE BOTTOMING, TECHNOLOGY, CONSUMER SECTORS LEAD BROAD BASED GAINS.

US EQUITIES rallied back from the long opening weekend of summer. Initial pressures from escalating geo-political tensions and falling home prices fell to the wayside after a report on US Consumer Confidence showed the largest gain in nearly 6 years. Underlying forces, such as continued support from a record low LIBOR rate, worked in congress with the increased positive sentiment to spur a sustained rally in equities. Gains were led by the technology sector with Apple gaining nearly 7 % on the day after an upgrade from Morgan Stanley based on perceived double digit growth for the company's I Phone and other electronics. Consumer discretionary stocks also gained as the positive sentiment numbers offered hope that a foreseeable end to the global pullback in spending may be on the horizon.

Financials gained, although they needed to overcome early pressure set up by a pre market report showing that home prices continued to fall at a record pace for the first quarter of 2009. There were some positive signs from this number as latter readings in the quarter showed the falling pace slowing somewhat. General Motors continues its wild spiral (or death roll) as its stock fluctuated violently as the countdown for acceptance of a tender offer by its bondholders appears likely to fail.

Overall, expectations for the equities this week should remain volatile, with today's gains from consumer sentiment being challenged by notions that the positive outlook may not translate into direct private spending in the near term, particularly as US employment figures offer a sobering reminder of the longer term difficulties ahead as the unemployment levels continue to march toward 10%.

Technically, June Dow Futures continue to ricochet between support and resistance levels. The move higher today sets up a level of support at 8260. The market would need a sustained close below this level to confirm a possible setup for downward momentum. A resistance target of 8578 sets up on the chart, with a break of this level setting up a test of 8710.