Futures point to higher open though neither the bulls nor bears seem committed. The week starts slow for economic news and fourth quarter earnings reports are slowing. Last week saw stocks fall for the second straight week, although a late session rally Friday helped keep losses to a minimum. Traders continued to be concerned about debt issues in Europe and the fact the U.S. has so far seen a jobless recovery.

Shares in Europe are higher this morning after falling sharply last week on the debt issues in Greece, Spain and Portugal. European finance ministers have been saying that the problem is under control and this has helped stocks in the region Monday. However, Asian shares didn't see the glass as half full, choosing instead to sell with the Nikkei in Japan down 1.05 percent.

Earnings this morning will be highlighted by CVS Caremark (CVS), Electronic Arts (ERTS) and Hasbro (HAS). Earnings have been mostly better than expected, but this has not necessarily led to gains for these stocks. In fact, reaction to earnings has been unpredictable, showing that traders aren't sure what to make of the future.

HAS shares are seeing gains this morning, up more than 3 percent following is earnings report. The toy maker beat earnings estimates by 28-cents a share with revenues up 11.7 percent. CVS is also seeing a gain for its shares after beating estimate by a penny a share. Same-store sales rose 4.9 percent with overall revenues up 7.0 percent. CVS shares are trading near $31.75 in premarket trading, up about 2 percent.

Retail stocks will be a focus this week with the January retail sales report due out Thursday. Expectations are for retail sales to rise 0.5 percent overall and 0.6 percent excluding autos. This would erase the 0.3 percent decline seen in December. Of course, analysts remain concerned about the impact on consumer spending if the jobs market does not show improvement. Treasury Secretary Geithner did state that he feels the economic recovery will be slow, but that we will not see a "W" recovery. This type of recovery would mean a retracement in the economy, as opposed to a "V" recovery, which has one specific bottom.

The key for the bulls Monday will be for support at 10K to hold. The index made a huge recovery Friday afternoon to recapture this level. The major market indices also showed a bull hammer candlestick formation. This occurs when a stock sees a large intraday decline in a downtrend, but recovers to finish positive. This often leads to gains for the security and can be a reversal signal.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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