U.S. equity index futures red: S&P 500 off ~0.7%
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Euro STOXX 600 index down ~0.4%
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Dollar ~flat; gold dips; crude gains >2%, bitcoin up
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U.S. 10-Year Treasury yield rises to ~3.55%
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DON'T STOCK UP JUST YET! (0920 EST/ 1420 GMT)
Morgan Stanley believes the recent bear market rally in U.S. equities is treading dangerous waters and recommends investors book profits and play it safe with defensive buys such as healthcare and utilities.
While the S&P 500 is trading above its 200-day moving average price, it has recorded steep losses for the year, and positioning for further upside is risky, Morgan Stanley chief U.S. equity strategist Michael Wilson said in a note.
The Wall Street bank says they're sellers of equities again, noting that growth stocks such as technology and some consumer-linked sectors are unlikely to benefit from falling interest rates given the risk to earnings.
"We are now right into our original upside targets (4,000-4,150) and we recommend taking profits before the Bear returns in earnest," MS strategists say.
The S&P 500 ended down 0.1% at 4,071.70 on Friday after a solid jobs report weighed on hopes for a less aggressive Federal Reserve. But the index is still up nearly 11% from its October closing lows.
S&P 500 INDEX: MOTH TO THE FLAMES (0900 EST/1400 GMT)
Traders remain keenly focused on the S&P 500 index as it flutters around, and between, a number of brightly lit chart levels:
The SPX, which ended Friday at 4,071.70, has now registered three-straight daily closes above its 200-day moving average (DMA). This closely watched long-term moving average ended Friday at 4,046.31, and is last falling around 2 points per session.
With e-mini S&P 500 futures suggesting an SPX drop of more than 20 points or so at the open, it looks like the 200-DMA will be tested again in early trade.
Friday's intraday low was at 4,026.83 and the 61.8% Fibonacci retracement of the August-October down-leg is at 4,006. This level should now attempt to act as support.
The SPX has additional support in the 3,937-3,906 area. This zone includes the November 29 and November 17 lows, as well as the 100-DMA, which ended Friday at 3,926.26, and is now rising about 3 points per session, and the 50% retracement of the August-October down-leg at 3,908.
Of note, on the plus-side, the 100-DMA, which contained mid- and late-November weakness, has now risen 20-straight trading days. That's its longest such streak since the SPX's early January 2022 top.
Meanwhile, the resistance line from the early-January high now comes in around 4,097 on Monday. This line, which is falling around 3 points per-session, capped strength on December 1, when the SPX topped at 4,100.51, or less than 3 points shy of it at the time.
There are, of course, additional levels to contend with in the event of a breakout in either direction, but traders will be watching closely for signs of momentum in the event any of these nearby levels give way.
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