Welcome to Tuesday’s Morning Coffee Break – Happy anniversary Mr. Market!  Today 5 years ago marks the closing highs for both the Dow Jones and S&P 500 indexes. It also marks the start of the downward move during the subsequent financial crisis.

As it stands from yesterday’s closes the Dow Jones is roughly shy of the 5 year high by 4% and the S&P 500 is about 7% from its 2007closing high.

U.S. are indicating another rough start after yesterday’s low volume negative day mostly due to Columbus Day holiday.

Markets will have to overcome headwinds from the euro zone this morning as the International Monetary Fund (IMF) cuts their global growth forecasts and sends a warning concerning a worldwide slowdown.

As traders start out their day – The Dow Jones  (DIA, quote) fair value is down by -13.65 to 13500.00, S&P 500 (SPY, quote) fair value is down by -0.43 to 1449.90 and the NASDAQ (QQQ, quote) fair value is coming in at 2774.00 down by -6.47 (as of 7:37 am)

Third Quarter earnings season kicks off today with  Dow component Alcoa’s (AA, quote) and Yum Brands (YUM, quote) after the closing bell.

On the economic calendar front its fairly quiet with traders focusing on Federal Reserve Board vice chairman Janet Yellen speech at the IMF’s annual meeting today at 8:30 a.m. ET

Morning Coffee Break Global Markets Watch

Asia

Overnight Asian markets end day mixed as Chinese equities moved higher bringing along Hong Hong’s markets along for the ride after the People’s Bank of China injected huge amounts of liquidity into the markets to help elevate tightening conditions.  China injected a whopping 265 billion yuan ($42.1 billion).

Labor and social unrest in South Africa sent commodity prices higher as traders feared supply disruption. A direct benefit for Australian commodity producer’s sending the Aussie stock market to 14 month high.

Euro Zone

European markers are mostly lower on the International Monetary Fund (IMF) cuts their global growth forecasts and sends a warning concerning a worldwide slowdown. Banks lead the markets lower with the Spain’s Banco Popular Espanol Sa (BPESF, quote) falling 4% in early trading.

Emerging Markets

Principal Financial Group (PFG, quote) announced today it will be buying Chilean pension manager AFP Cuprum. The deal is being reported as a $1.5 billion deal.  This is the latest efforts of PFG to expand into emerging markets.

Morning Coffee Break Companies To Watch

Earnings Watch

Alcoa’s (AA, quote) and Yum Brands (YUM, quote) report after the closing bell today.

Company Watch

Edwards Lifesciences (EW, quote) medical device maker announced its lowering the their fiscal third quarter outlook. The company says the sales of  its key product, Sapien heart valves are slow because of the European economy  as well as slow growth in the U.S.

Rio Tinto (RTN, quote) said it will be speeding up additional cost cuts due to global economic growth. The company has already cut 500 million in cost. Rio Tinto is the second largest iron ore miner.

Futures and Commodities Corner

Crude Oil

WTI crude oil prices jumped for the first time in 3 days during the euro zone session. The move comes on the back of China’s liquidity injection of 265 billion yuan ($42.1 billion) to help stimulate growth.

Traders are also looking to the Euro Zone leaders as they meet to discuss Spain’s and Greece’s aid packages sending hope to begin move the Euro Zone economy in the right directions or at least slowdown the slide.

Be sure to check out the Daily Energy Report for a compressive look at the global energy markets by Tom Pawlicki.

Equity only readers can gain exposure to WTI Crude Oil through the United States Oil Fund (USO, quote) ETF that seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The USO will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.

For natural gas traders can gain exposure through the United States Natural Gas Fund (UNG, quote) ETF that seeks to replicate the performance, net of expenses, of natural gas. The trust will invest in futures contracts on natural gas traded on the NYMEX that is the near month contract to expire.

Gold

Gold prices are ticking lower in early electronic trading as the U.S. dollar moves higher on the IMF global outlook cut and U.S. markets take in the news of China’s easing efforts over the concerns of European crisis.

Gold futures moved lower this morning by $-1.40 to $1,774.50  in electronic trading.

Looking at daily chart of gold traders will find price has flat lined for 18 trading session now.  The range is too tight to trade as a range but a good strategy to consider is to place entry stop orders above and below the range looking for a sudden breakout. The longer price consolidates in the flat line range the sharper the move, well at least that’s the theory.

 

Equity only readers gain exposure to the gold through the SPDR Gold Shares Trust (GLD, quote) ETF that seeks to replicate the performance, net of expenses, of the price of gold bullion. The GLD trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets.

 

Crude Oil	$90.54	+1.21	+1.35%
Gold	$1776.70	+3.20	+0.18%
Wheat	$870.50	+9.50	+1.10%
Corn	$746.50	+4.50	+0.61%
Live Cattle	$126.40	UNCH	UNCH
Lean Hogs	$76.875	UNCH	UNCH
Treasury Bond	147.75	-0.50	-0.34%
10yr Note	132.9844	-0.2812	-0.21%
2yr Note	110.2109	-0.0156	-0.01%
U.S. Dollar Index	79.70	+0.08	0.10%
			As of 8:48 a.m. ET

The Morning Coffee Break Bottom Line

The Dow and S&P 500 have just turned and are marginally in the green suggesting a flat open with the NASDAQ still pointing lower as we approach the open. With no economic data on deck for the second straight day look for headlines from Greece as the leaders attempt to determine if Greece can receive next installment of aid. German Chancellor Angela Merkel has just arrived in Greece for the first time since the euro zone crisis began.  Traders will watching for any signs and comments from her as she assets the situation in Greece, some may take the outcome and attempt to apply it to Spain.