January 28, 2013-Markets Cautious at Overbought Levels

With earnings helping to extend the protracted rally that has helped markets scale fresh multi-year peaks, the nervousness over whether the gains are sustainable has become palpable. The major index futures point to a flat open on Wall Street. The earnings flow continues and if they come in line with the trend, then there may be more reasons for the markets to cheer. The durable goods orders and pending home sales data due for the day could also lend some direction to the markets. Markets may also prefer to lie low ahead of several key first-tier economic events scheduled for the week. Earlier in the global trading day, some Asian markets capitalized on positive domestic economic data, while European markets are seeing some consolidation. The Dow futures are adding 4 points, the S&P 500 futures are gaining 0.5 points and the Nasdaq 100 futures are up 0.25 points. U.S. stocks advanced yet again in the week ended January 25th, as earnings and solid economic data provided the already stretched markets additional strength. The Dow Industrials and the S&P 500 Index closed at fresh 5-year highs.