US stock futures are nearly flat Friday morning following three straight days of losses for the Dow and S&P. Investors and traders could be taking some profits after the S&P has gained more than 10% in the first quarter of 2012. Technically, this is an area to be more cautious and get in “wait-and-see” mode. After closing below the 10-day moving average yesterday, we could probe some slight deeper support levels before traders come in to buy the dip.
There is news today that Federal Regulators are probing high frequency trading firms and whether they have taken advantage of close ties with exchanges to short change other market participants. Specifically, the SEC is looking at whether there was illegal communications between firms and exchanges attempting to limit competition or manipulate markets.
European markets were higher overnight as they looked to also snap a three-day losing streak, but have given back those gain in the last several hours. Concerns continue to grow about a bigger than expected slow-down in China. While all eyes have been trained in the circus on Europe, the potential collateral damage from a China slow-down has not been discussed as extensively. China is a major consumer of natural resources, and slower growth will likely hit related assets the hardest.
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*DISCLOSURES: Evan Lazarus is short (NYSEArca:UPS).