TradeMaster Daily Stock Alerts Blog

Small-cap stocks are expected to open sharply lower, pulled down by a spate of disappointing earnings, particularly in the tech sector. In addition, the recent run of bullish surprises on the banking front appears at risk on soft results from Wachovia Corp. (WB). The Russell 2000 (NYSE:IWM) was off about 0.8% in overnight action, which would suggest a cash opening near 691.50.

On the tech front, bellwether Apple Inc. (AAPL) was clobbered overnight, sinking some 9% when the maker of iPods projected forward earnings below the Street forecast. Vodafone Group PLC (VOD) tumbled some 14% during European trading as the company lowered its outlook. Also, Texas Instruments (TXN) failed to meet earnings projections and was off some 11% in after-hours trading. Heading into the open, the tech-laden Nasdaq futures market was flirting with 2% losses.

The banking sector has been rejuvenated in recent days by a string of positive earnings surprises, including Wells Fargo & Co. (WFC), JP Morgan (JPM), Citigroup (C) and Bank of America (BAC). However, that momentum should be halted today as shares in Wachovia Corp. (WB), the fourth-largest U.S. bank, slumped 6% in overnight trading as the firm’s earnings disappointed and the bank slashed its dividend. Also in the financial sphere, American Express (AXP), flirted with double digit declines overnight after earnings missed the mark.

European stocks were taking a beating heading toward the U.S. open, snapping a string of four consecutive higher sessions, with the market pulled down by the Vodafone news. Asian stocks were basically flat, although Japan generated a sizable 2.9% rally.

Crude oil futures were relatively tame moving into the stock market open, with prices down about 50 cents a barrel in the $130-dlr range. Gold was in rally mode overseas, pulling in safe-haven fund flows as the equity market slipped in after-hours trading. The U.S. dollar firmed about 0.2% against the euro this morning, but remained in the lower portion of historic ranges.

Looking at the chart picture, the Russell appears set to test the first support point near 691.50 on the open. The key short-term level is down at 684. If the market can shake off the likely opening slide as the day progresses, then resistance will be around 701 and then at 707.50.

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