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Stephen Pope is the founder and Managing
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He has worked in the international capital...

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Wall Street Journal features Stephen Pope & Spotlight Ideas

Friday May 24th 2013


The Wall Street Journal

U.S. stock market futures fell Friday ahead of durable-goods orders data that are expected to show continued sluggishness, and as investors grew cautious ahead of the long holiday weekend. Continued volatility in Asia also was weighing on sentiment.

About three hours before the start of trading, Dow Jones Industrial Average futures fell 41 points to 15248. The S&P 500 futures eased 6.7 points to 1,643.30, and Nasdaq-100 futures fell 11.75 points to 2,980.50. Changes in futures don't always accurately predict early market moves after the opening bell.

"The length and strength of the recent rally has made many investors worry that if they do not book profit, they face a risk of being burned," said Stephen Pope, managing partner at Spotlight Ideas, in emailed remarks.

"Also, having had a chance to be well ahead of the index over the first five months of the year…why risk the potential profit and out-performance…therefore start hugging the benchmark by which ones funds are measured," said         Mr. Pope.

Markets will be shut on Monday for the Memorial Day holiday.

Friday's data offers up durable-goods orders in April. Economists polled by MarketWatch are forecasting new orders for long-lasting items will rise 1.4%, but much of that gain will be due to autos and aircraft.

Many investors may also be unwilling to take positions ahead of the long weekend and after chaos continued in Japan on Friday. Swinging more than 3% on either side of the prior day's close, the Nikkei 225 index finished the day up 0.9%. The fall for the Nikkei was triggered by a steep rise in the yen after Bank of Japan Governor Haruhiko Kuroda said stability in the country's debt markets was "extremely desirable."

Worries the Federal Reserve will possibly taper its bond-buying program and weak data out of China contributed to a 7.3% plunge for the Nikkei on Thursday, the worst one-day drop since March 2011.

Wall Street stocks fell modestly on Thursday, paring some big losses earlier in the day on the heels of those Nikkei losses. Upbeat U.S. economic data and gains for Hewlett-Packard Co. HPQ +14.60%eased some pain over worries the Federal Reserve will possibly taper its bond-buying program.

The Standard & Poor's 500 Index dipped 4.84 points, or 0.3%, to end at 1,650.51, while the Dow industrials finished down 12.67 points, or 0.1%, at 15294.50, after dropping as much as 127 points.

"Overall we believe the equity bull market will continue as liquidity will stay ample for a very long time even if the Fed starts tapering already this autumn," said analysts at Danske Bank DANSKE.KO +0.29%in a note. "Some stock markets have been very overbought, though, and it is only natural, and healthy to see corrections occasionally."

Among corporates, Abercrombie & Fitch ANF +0.48%is expected to report a loss of 5 cents a share in the first quarter, according a consensus survey by FactSet.

Shares of Sears Holdings Corp. SHLD -0.34%could see premarket pressure. The retailer announced deep first-quarter losses, triggering sharp losses in late trading a day prior.

Also in focus, Marvell Technology Group MRVL -0.44%said first-quarter earnings fell 44% on sliding sales and higher operating costs, but core earnings beat the company's forecast, helping the stock to rally 7% after hours.

Pandora reported better-than-expected sales for the first quarter, with big gains in sales from mobile sources. Shares jumped in late trading.

In other markets, European stocks turned lower along with U.S. stock futures. A better-than-expected rise in German business confidence only had a brief, positive impact on stocks in that country.

Gold prices fell, along with oil and the dollar continued to fall against the yen.

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