There are a lot of broken charts out there after last week's sell-off, and we could be in for a low-volume trade today.
US stock futures point to a higher open Monday as the market tries to bounce back from its worst weekly decline since June. Positive economic data out of China and news that Greece passed its 2013 budget are boosting sentiment this morning. It's Veterans' Day and bond markets are closed, so we could be in for a low-volume tape. The fiscal cliff will continue to be a talking point as Democrats and Republicans attempt to reach a compromise.
The European debt crisis has faded into the background a bit during the home stretch of the US elections, but last week it came back into the headlines. Fortunately, Greek lawmakers voted to approve the new austere 2013 budget, paving the way for the next tranche of aid. European finance ministers will meet later in the day to officially approve the aid package, which comes at an important stage for Greece, which has $6.4 billion worth of bonds maturing.
With a blank economic calendar in the US, a pair of M&A deals are leading the headlines. Precision Castparts (NYSE:PCP) said it agreed late Friday to buy Titanium Metals (NYSE:TIE) for $2.9 billion. The buyout represents a 40% premium from Friday's closing price for Titanium Metals.
Jeffries (NYSE:JEF) shares are up 22% on news that Leucadia National Corp (NYSE:LUK) has agreed to buy all shares of the investment bank that it doesn't already own. Leucadia already owned 28.6% of Jeffries. Jeffries CEO Richard Handler will be the CEO of Leucadia after the deal closes.
Later in the week we will see a slew of retail earnings. which will give investors a gauge of the sector heading into the holiday season. Most notably, Home Depot (NYSE:HD) reports on Tuesday, with Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) reporting Thursday. In addition, TJ Maxx (NYSE:TJX) and Saks (NYSE:SKS) report on Tuesday, Staples (NASDAQ:SPLS) and Abercrombie & Fitch (NYSE:ANF) on Wednesday, and Gap (NYSE:GPS) and Sears (NASDAQ:SHLD) on Thursday.
There are a lot of broken charts out there after last week's sell-off, and we could be in for a low-volume trade today. Today, I believe, is a day to take it slow and wait for some consolidation to occur. While you may not get the perfect average price, I believe the risk-reward ratio is much more favorable when you wait for consolidation setups occur.