Small caps remain lower after short-lived data bounce

Kevin Pendley | Apr 29, 2008 10:27am EDT | Comment

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Small-cap stocks opened lower, slightly trimmed losses after the Consumer Confidence report came out at 10:00 a.m. ET, but then retreated right back to pre-release levels. The report showed an upward revision to the March report, which provided a brief bid to the market, but it was not enough to catch hold (at least immediately). At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was down 1.84, or 0.25%, at 723.53.

The Consumer Confidence report was pegged at 62.3 in April, which was in line with the forecast of 62, but the March number was revised upward to 65.9 versus 64.5. Still, the April figure was the lowest in five years.

Next on line … President Bush is slated to hold a press conference at 10:30 a.m. ET, where he is expected to talk about the economy.

The opening action was soft in line with overnight declines on a dip in European shares as Deutsche Bank posted its first quarterly loss in five years, and French tire company Michelin tumbled 9% on sloppy earnings.

Large-cap companies influencing trade this morning included drug company Merck & Co. (NYSE:MRK), which was down 7% on news that the FDA rejected a new cholesterol drug. From an overall stock market picture, the news had a somewhat muted impact, because it lifted Merck competitor Abbott Labs (NYSE:ABT) by 4%. In addition, Visa (NYSE:V) posted decent earnings ahead of the opening, but the financial firm was down 3% in early action.

The S&P 500 stalled approaching the 1,400 level on the latest push upward, and that key figure resistance will be closely watched through the rest of the week’s major economic events. In the Russell 2000, the market yesterday climbed through 724.72, which marks a critical 38.2% Fibonacci retracement of the entire bear market collapse. Sustained action through that point this week would open the door to move toward the next Fibonacci levels near 750 and 775. Of course, along the way the market will also have to tackle the first noteworthy chart resistance zone at 731, which marked a double top from the February highs. For today’s action, look for resistance at 728.50, 731 and 735, with support at 720, 714 and 708.

Within the small-cap spectrum, LCA Vision Inc. (Nasdaq:LCAV) tumbled 18% early, gapping lower on weak earnings. Intevac Inc. (Nasdaq:IVAC) was down 18% as well, also on earnings news, and TheStreet.com Inc. (Nasdaq:TSCM) was off 15% on soft earnings. On the upside, TranS1 Inc. (Nasdaq:TSON) was up 5% after news that the FDA has cleared one of their minimally evasive surgery procedures for marketing. Allegiant Travel Co. (Nasdaq:ALGT) shot up nearly 19% on solid earnings and Seacoast Banking Corp. of Florida (Nasdaq:SBCF) was up over 17%, gapping higher after earnings.

Individual small-cap companies slated to release earnings today at 11:00 a.m. ET include Dominos Pizza Inc. (NYSE:DPZ), G&K Services Inc. (Nasdaq:GKSR), Vitro Sociedad Anonima (NYSE:VTO), Glatfelter (NYSE:GLT), Sonic Automotive Inc. (NYSE:SAH), Castle A M & Co. (NYSE:CAS), American Ecology Corp. (Nasdaq:ECOL), Wausau Paper Corp. (NYSE:WPP), K-Swiss Inc. (Nasdaq:KSWS), Ballard Power Systems Inc. (Nasdaq:BLDP), Hanger Orthopedic Group Inc. (NYSE:HGR), Angiotech Pharmaceuticals (Nasdaq:ANPI), Bankatlantic Bancorp. (NYSE:BBK), Health Grades Inc. (Nasdaq:HGRD), Magnetek Inc. (NYSE:MAG), Dixie Group Inc. (Nasdaq:DXYN), Tennessee Commerce Bancorp (Nasdaq:TNCC), Infocus Corp. (Nasdaq:INFS) and Trinity Biotech (Nasdaq:TRIB).

Among broad market sectors, the early poor performers were found among health-care facilities, building products and real estate management companies. Bucking the early downside bias were personal-products firms, specialty stores and communication equipment firms.