Morning Market Comment

It looks like a rebound is in the making for Wall Street with rising S&P futures. As noted yesterday, The S&P 500 managed to stay above the 3 month trendline (its 20 day moving average) which was one of the few positive things in an otherwise ugly day of fairly strong selling. One eye will need to be kept on the S&P for any testing of the 1500 level which appears to be a key support area; another eye kept on the 10 year note yield as additional firming would pressure stocks. Volume will be lighter than usual by midday ahead of the Memorial holiday weekend. I will be among the masses leaving town this afternoon.

A good chunk of the folks heading to their Memorial Day destinations will do it using an automobile. Triple-A guesses that more than 32 mln will people will use a motor vehicle to travel 50 miles or more during the holiday weekend, up about 2% from last year and despite record high gasoline prices. My own anecdotal indicator is observing traffic on Sunday afternoons headed south (since I'm usually going north after a visit to mom's house) on the NY Thruway to the Tappan Zee Bridge toll bottle. Last weekend the Thurway (I 287/87) was jammed packed. Travel experts say those with holiday weekend budgets strained by the high price of gasoline will offset that cost by perhaps staying in slightly cheaper accommodations, or by buying less tourist trap junk, eating at a cheaper restaurant, etc. Energy remains a big concern for the markets because of its impact on the driving force of the economy: consumer spending. And there appears to little relief in sight at the pump: Gasoline prices rise on low inventories, refinery outages. Keep praying there is no hurricane strike on energy assets later this summer in the Gulf of Mexico.

Energy is also driven by geopolitical events and surely stories like these keep the pressure up:
Iran will push nuclear program 'to the limit'
Oil edges up on Nigeria woes
Iran’s leader warns Israel on war in Lebanon

From an options standpoint, a three day weekend should be looked at with caution. There have been many situations lately where option volatility is ramped up, especially in front month contracts, due to rumor mill speculation. Buying and holding those types of options through the long weekend, unless a given deal happens, will result in an unpleasant decay in value by the time Tuesday rolls around. Be careful.

On the corporate front this morning, M&A remains a dominant theme:

Coke to buy Glaceau in $4 billion deal.

Ah, dah Sveeden: Nasdaq to buy Nordic bourse group OMX for $3.7 bln.

There's more buzz surrounding Apple's iPhone. CNBC reported that June 20th is the release date, citing a "local store". PC World is stoking some controversy over whether AT&T stores are taking iPhone pre orders.

We get Existing Home sales data at 10 today.

A few quick analyst notes:

• Banc of America starts Gilead (GILD) with a Buy and $94 target
• Friedman Billings starts Hewlett Packard (HPQ) with a Outperform and $53 target
• HSBC downgrades Tiffany (TIF) to a Neutral on valuation.