Today’s Market Guidance

Financial Overview:
With overnight stock price action seemingly remaining close to the prior session's highs overnight, it would seem like a bullish attitude has remained in place. However, we still get the sense that the bull camp needs almost a perfect storm of fundamental news to sustain the upward tilt in the face of an ongoing high level of political uncertainty. Surprisingly world equity markets managed to discount the news that Moody's was expressing concern toward the US and UK debt ratings, because of their burgeoning debt loads. In our opinion, the ratings agencies have been soft on the US and UK debt loads, especially since the US continues to add to its debt with seemingly non-essential potentially non-stimulating programs. However, the equity markets didn't give the Moody's news much attention and that suggests to us that the market is still in a position to spin the headlines into positives. The real test of the bullish resolve will probably be seen early in the trading session today, in the wake of the private jobs surveys, which we expect to predict job losses somewhat bigger than what might be baked into overall market expectations for the US Friday morning US numbers. However, if the markets manage to open in positive ground, that would mean the potentially negative early numbers were skirted and that in turn could set the market up for more minor gains off the ISM Non Manufacturing readings.

DOW:
The March Mini Dow comes into the early action today sitting just under the highs forged in the prior trading session. With the March Mini Dow managing to pierce the 10,250 level yesterday, that level will be an early pivot point zone. In the wake of a positive opening today, we see little in the way of resistance in the market until the 10,327 level. We do think that part of the bullishness in the marketplace since last week's lows, is the result of talk that the Volcker rule for regulatory reform will have trouble passing in its announced form. In short, we give the edge to the bull camp, but the market will need a good ISM reading to see any noted progression on the upside. At this point, it would not be a good trade to see the March Mini Dow fail to hold critical support at 10,205.

The daily stochastics have crossed over up which is a bullish indication. Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near term resistance is taken out. The market's short-term trend is positive on the close above the 9-day moving average. The market's close above the 2nd swing resistance number is a bullish indication. The near-term upside target is at 10380. The next area of resistance is around 10331 and 10380, while 1st support hits today at 10169 and below there at 10055.

S&P:
The S&P almost sits right on the prior session's highs in the early going today, and that would seem to leave the bull camp in the driver's seat. However, as suggested already the markets in total probably need something positive from the ISM Non Manufacturing readings in order to give the market upside momentum. We see little in the way of chart resistance in the March S&P until the 1103.30 level, but other noted technical analysts suggest that the overall trend in the S&P will remain down until the 1110 level is regained. We would remain bullish toward the S&P as long as the March S&P manages to hold above pivot point support of 1096.

The daily stochastics gave a bullish indicator with a crossover up. The stochastics indicators are rising from oversold levels, which is bullish and should support higher prices. The market's close above the 9-day moving average suggests the short-term trend remains positive. Market positioning is positive with the close over the 1st swing resistance. The near-term upside objective is at 1114.00. Short-term indicators suggest buying dips today. The next area of resistance is around 1107.00 and 1114.00, while 1st support hits today at 1087.50 and below there at 1075.00.

NASDAQ:
In looking at the charts, the Nasdaq seems to be lagging behind the rest of the market on the recent rally. Not surprisingly, the Nasdaq burned through a number of very favorable tech sector earnings reports, in the face of a downward adjustment in world economic recovery views and that seems to have robbed the Nasdaq of its leadership capacity. However, Apple shares did provide some leadership for the bull camp yesterday and that residual support could see the March Nasdaq forge a rise up to the next resistance level up at 1784. In short we would remain slightly bullish toward the Nasdaq, as long as the March contract manages to hold above critical support of 1765.

US Dollar:
The Dollar remains in a weak downward tilt on the charts in the wake of an ongoing shift toward risk. We suspect that ratings concerns from Moody's toward the US and UK overnight leaves the trade somewhat negative toward the US Dollar. While the early private jobs data might serve to temporarily lift the US Dollar, in a flight to quality manner, the ISM Non Manufacturing readings will probably serve to rekindle selling pressure in the Dollar. As in Treasuries, we suspect that a large measure of the short term trend impetus in the Dollar will be derived from the direction of equity prices. In other words, to see the Dollar remain under pressure today, probably requires ongoing gains in US equities. All in the all, the currency markets don't look to have a definitive driving bias in the trade today, unless there is a surprise from US regulatory reform, or from the Greece situation. In fact, with the EU apparently expected to confirm the latest Greece budget proposal, that could mean that political developments today could foster additional downside in the US Dollar.

Gold:
Once again the gold market appears to have discounted classic fundamental information, as prices managed to hold in positive ground in the face of news of a minor gold production increase from a Russian miner. However, the Russian gold output tally wasn't a large increase and recently the gold market hasn't been overly interested in physical supply side issues. One would think that gold would benefit from the overnight US and UK credit ratings issue, as concern toward the US 'AAA' rating would seem to be a classic flight to quality issue for gold. In fact, with the US issuing a quarterly refunding announcement later today and financial reform testimony ongoing, the prospect of a return to a flight to quality focus in gold, isn't out of the question. In fact, with the World Gold Council recently floating a story on the positive correlation between gold prices and the growth in global money supply, there has been a lot of information lately that could be capable of pushing the gold trade focus back toward past fundamental haunts. However, into the opening today the focus of the gold trade looks to remain fixated on expectations of a weak Dollar. It also appears as if the press overnight was noting increased fund buying interest in gold and that might have been the main catalyst behind the early pulse up move in prices. From a technical perspective, the bull camp was probably cheered by the April gold's temporary probe of the even number $1,125 level early today, but the failure to hold all of those gains probably served to temper the bull's enthusiasm.

Silver:
The silver market managed a noted pulse up attempt early today but the market was unable to hold all of those initial gains. Like the gold market, the silver market remains reliant on weakness in the Dollar and perhaps reliant on more gains in the equity markets. Press reports overnight of an increase in gold fund buying might have provided the silver market with its early pulse up move, but it is also possible that silver was lifted temporarily in the wake of the US and UK credit ratings flap. In fact, the slide in the US dollar overnight seemed to correlate tightly with the Moody's debt level issue and therefore silver might have seen some flight to quality type buying overnight. The bull camp hopes that the US ISM Non manufacturing readings are beneficial, but it would also seem like silver and copper are likely to take a large amount of direction today from the direction of the US equity markets.

Crude Oil:
April crude oil has been able to gain some additional upside traction overnight. Although crude oil has set back from overnight highs, it has been impressive to see the market mostly shrug off a bearish inventory reading. Instead, the oil market seems to be focused on tightening product supplies and an improved outlook for fuel demand based on a more bullish macro economic view. Crude oil has gained overnight despite yesterday's API report showing a larger than expected 4.7 million barrel jump in crude oil stocks and with some refiners starting maintenance and other refiners shutting down operations due to poor margins, oil stocks look set to build in coming weeks. Last week this inventory news would have likely sunk the oil market. But strong macro economic optimism has been revived this week due to signs of growth in global manufacturing, indications China's oil demand will remain robust despite the credit tightening while strong corporate earnings are also boosting investor risk appetite. As a result, the crude oil market seems to be gleaning support from the API report showing a sizable decline in distillate stocks and an unexpected decline in gasoline supplies which seems to be tempering concerns that current fuel demand remains weak. The technical setup for April crude oil has also seen a significant improvement since the market clearly set a near-term low at $72.89 last week after reaching a technically oversold extreme. With the market making a push above the 40 day moving average overnight this also seems to leave April crude oil in a position to eventually test $80.34 on a move above the $78.92 resistance level. Part of the strength in crude oil seems to be tied to the positive equity market action seen this month along with the retreat in the dollar which has raised investor risk appetite for oil as an inflation hedge. Therefore, it may be important for these key outside market influences to stay positive in order for the oil market to hold on to an upward bias. While the oil market looks to be starting out the session on fairly strong footing given the overnight action, today's EIA report and readings on private employment and the US service sector means the bull camp could face both inventory and economic headwinds. Macro economic optimism seems to be running high again and if the EIA report also shows declines in product stocks and there are no bearish surprises in the economic data, then we suspect the bull camp is likely to stay in control. Otherwise, if oil demand doubts resurface from today's news, then crude oil is likely to give back a portion of this week's gains. But since it also looks as if a technical low has been set, traders should consider buying crude oil on price dips.

Natural Gas:
With the market becoming oversold on last week's price break and given the cold forecast ahead, we still suspect March natural gas has the potential to trade at higher price levels. Outside market influences should provide a measure of support to natural gas and in fact, strength in crude oil and a weaker dollar likely helped to lift natural gas off overnight lows. If crude oil can continue to gain upside traction through today's inventory report, we suspect some of that market's strength should spill over to support natural gas. But besides outside market influences, the weather outlook should provide stand alone price support to March natural gas. Most weather forecasters are predicting below normal temperatures across the US heating region through mid-month and higher heating demand will help reduce the supply surplus. March natural gas is encountering some overhead resistance in the $5.50 to $5.533 price area as lingering concerns over ample supplies and weak demand may be making the trade a bit hesitant to lift the market into a higher trading range. But the demand outlook for natural gas may start to turn more optimistic if the balance of the economic reports out this week comes in better than expected. In fact, the strong reading on US manufacturing this week has significantly improved the demand outlook in the rest of the energy complex. Today's report on private employment and the service sector industry will provide natural gas with some additional economic insight that could influence trading. With daily technical signals also turning positive, we see the bias in natural gas to the upside.