Futures point to further gains for the major market indices, but the retail sales report could be a factor. Economic data has been light all week, but traders will get a key report in the form of retail sales at 8:30 a.m. est. this morning. Data on consumer sentiment is also on the schedule Friday and it will be interesting to see if these reports spur larger trading volumes. Overseas markets have seen mixed trading with shares in Europe higher, but markets in China falling. The S&P 500 (SPX) closed right at resistance Thursday, so today's news could go a long way in breaking this area of resistance or pushing stocks lower.

Retail sales for February are expected to show a decline of 0.2 percent following a gain of 0.5 percent in January. Sales that exclude autos are expected to be flat. Though the jobs market has not improved as quickly as hoped, consumer spending has remained better than expected. However, the longer it takes for jobs to become available, the more likely it is that the consumer will cut back on spending, especially for nonessential products.

Consumer sentiment for the early March is expected to show a modest increase to 74.0 from February's reading of 73.6. Though still well below the normal readings above 80 back in 2007, this sentiment index is still more than 15 points above the year ago period. If retail sales and sentiment exceed expectations, it possibly could provide the incentive for stocks to break through resistance. However, light volumes have shown that traders are looking for some solid data to convince them to buy en masse. This means an inline or disappointing figure for these reports could lead to some profit taking.

Merger news continues to be a focus, this time in the fertilizer sector. Last month, Yara International of Norway bid $4.1 billion for Terra Industries (TRA). This bid was accepted by the board, but then a bid from CF Industries (CF) came in at $4.68 billion. Subsequently, TRA has accepted the larger bid with Yara stating that it will not raise its bid. Shares of TRA and CF are lower on the news by 2 percent and 6 percent respectively.

The tech sector could be an outperformer once again Friday thanks to earnings news from National Semiconductor (NSM). The chip maker beat earnings estimates by 4-cents a share and also exceeded revenue estimates. Better yet, NSM raised its guidance for its fiscal fourth quarter, sending the stock higher by nearly two percent in pre-market trading. Unlike the broader market, the Semiconductor HOLDRs (SMH) have not recovered all of the losses seen during January's correction. However, SMH shares have moved back above their 50-day moving average.

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

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