Counter-Trend Tuesday

Good morning. On oversold bounce beckons as a strong rally in overseas markets set a positive tone.

Along with the Wall Street's "buy the dip" choir, Treasury Secretary Henry Paulson said weak U.S. housing market and sub-prime lending woes will not have major impact on financial sector or global economy. Much is also being made about Greenspan's latest clarification that he now only sees a one-third probability the U.S. economy will fall into a recession. Meanwhile, this morning's economic report wasn't very friendly - Q4 productivity was revised lower and unit labor costs more than doubled economists' forecasts with a rise of +6.6%.

Premarket trading is much more active today than it has been in nearly a week. Notable gainers are SYKE, TOPP, TSTC, XIDE, PAY, ADCT, PNTR, XING, ICON, SOLF, DSTI, ADLR, EMU, HMIN, SMDI, CYTR, CHINA, TSL, HRT, ACH, GIGM, ESLR, AAUK, LEND, BRLC, CPSL, INFY, XLNX, and FTEK. Notable losers are ITMN, DIGE, PBHC, PGIC, and BBBY.

Along with a positive gap open, we have the 10:AM report on factory orders and even more Fedspeak scheduled for this afternoon. Traders will be watching how the market responds to the S&P 1400 level and see if they can build further upon the positive open. We'll likely see a short-squeeze/profit-taking in the early going but the key will how the market responds after that. Have a good one!