Today’s Market Guidance

Financial Overview:
The stock market appears to be in a bit of a corrective mode in the early action today. Surprisingly the market was unable to extend a recent pattern of gains in the wake of up beat earnings news from cyclical credit card companies. Perhaps the market is concerned about incendiary trade dialogue developing between the US and China or perhaps the markets are still concerned about the amount of uncertainty flowing from Washington. It is also possible that the stock market was overdone from the recent bounce and some players are unwilling to hold longs ahead of the upcoming payroll report. One could also say that weakness in Asian stocks has spilled over into the European and US markets. We would not expect to see any tightening news from the various central banks as the progress in the global economy just hasn't put the banks in a position to withdraw stimulus. It is a very negative sign that the stock market is showing signs of weakness in the face of news that Senate Democrats are set to unveil tax credits and other plans to create jobs. It's a very telling sign that equities look weak and might stay weak right in the face of a 'jobs bill' offering.

DOW:
Even with the prospect of decent scheduled number flow later this morning equities are showing sloppy to weak early action. If one would suggest that stocks are set to have a down session in the face of positive numbers and a jobs bill, it would seem like the 'stock market' has no faith in the upcoming Congressional offering on the jobs front. Initial downside targeting is seen at 10,128 but a decline to even number 10,000 isn't out of the question through the US payroll reports on Friday morning. It almost seems as if the stock market is shifting back into a position where better numbers are negative as that in turn could push the Fed closer to hiking rates.

Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above resistance. The market's short-term trend is positive on the close above the 9-day moving average. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside target is at 10247. The next area of resistance is around 10243 and 10247, while 1st support hits today at 10237 and below there at 10234.

S&P:
The S&P has carved out a recent pattern of lower highs this week and with the lower action this morning, it would seem like the market is content to spin most developments into the bear's favor. If favorable scheduled data flow and the latest Washington fix fails to turn this market back up, we have to fear a failure into and through the upcoming US payroll result. Near term downside targeting is seen at 1082, but a full return to the January lows could be in the cards if the market can't right the ship and climb back above the 1100 pivot point on the charts.

Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The market's short-term trend is positive on the close above the 9-day moving average. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside objective is at 1096.62. The next area of resistance is around 1096.25 and 1096.62, while 1st support hits today at 1095.75 and below there at 1095.63.

NASDAQ:
The Nasdaq has held up relatively better than the upper end of the market. In fact, the March Nasdaq even managed a fresh new high for the move in the overnight action. Perhaps the Nasdaq saw those credit card company earnings as a positive cyclical sign for lower capitalized stocks. Critical support in the March Nasdaq is seen at 1763 today with more critical support through the Payroll window seen down at 1750.

US Dollar:
The Dollar has managed a fresh new high for the move in the overnight action and we suspect that weakness in global equity prices is contributing to the upward tilt. With the US equity market unable to benefit from favorable scheduled data and the US stock market seemingly discounting the Senate jobs offering before it is even released, we get the sense that global macro economic sentiment is deteriorating. Perhaps there are concerns of a US/China trade flap or perhaps overt weakness in the Pound is allowing the Dollar to win by default. It also appears as if the Dollar is benefiting from debt concerns in the Euro zone and that leaves the Dollar with an edge against everything but the Yen. With the yen also showing some early strength, it seems as if the carry trade crowd is once again finding fresh confidence from hopes of a long drawn out global recovery. In conclusion, the Dollar looks to grind higher over the coming sessions, with a weaker than expected US jobs report on Friday probably putting the March Dollar definitively above the 80.00 level.

Gold:
With weak equities, renewed EU debt concerns and a generally higher US Dollar, the bear camp in the metals seems to have the early headline edge. Apparently the markets are rekindling concerns of debt problems in Spain and Portugal overnight and that undermines the Euro and in turn serves to lift the Dollar. The bull camp in the metals has to be disappointed with the failure to benefit from mostly decent scheduled data flows this week. In fact, most physical commodity markets even failed to benefit from slightly better than expected private US jobs surveys yesterday. With the Senate expected to float a Jobs creation program today, one would have been expecting the US and global equity markets to be supported but instead sentiment in those markets remains poor. However, the markets will also be presented with weekly initial and ongoing claims data and expectations are generally calling for declines in those numbers. It also seems as if the trade is expecting a mostly up beat US Factory orders report but given the recent lack of attention to scheduled data, it isn't clear that this type of number will turn sentiment.

Silver:
The recent strong correlation of silver prices with the stock market and the recent reliance on a weak dollar and strong economic news for finding new buyers has helped drive the market lower yesterday and again overnight. The lack of new buying interest on the break has traders nervous with the long liquidation trend in the market and the recent slide in open interest to the lowest level since September. The strong dollar and fears of an eventual tightening situation for the US and the recent tightening efforts in China has helped put the bear camp in control and the long liquidation threat in tact. The US dollar moving to the highest level since August has added to the bearish tone for the silver market.

Crude Oil:
Crude oil has continued to retreat in the overnight trade with the market being undermined by weak fundamentals in the energy sector. Economic optimism seemed to return earlier in the week after a report showed strong growth in the US manufacturing sector. But yesterday's EIA inventory report clearly shows that oil demand remains weak and that the pace of the economic recovery hasn't been strong enough to boost fuel consumption. Total product demand over the past four weeks was 2% lower than year ago, at time when the US was in the depths of the recession. In fact, part of the slump in crude oil yesterday was tied to a disappointing reading on US service sector growth which seemed to raise further economic recovery doubts. While the 2.3 million barrel rise in crude oil stocks was certainly above expectations, the market seems to be more concerned that refiners continue to cut back operations due to slack fuel demand. The refinery operating rate fell to 77.7% last week, a non-weather related 20 year low. But with the refinery maintenance period just ahead, the operating rate could sink further raising the risk for a significant build up in oil stocks into the spring. So far, oil prices haven't been supported by a report from one of China's state run oil companies predicting China's crude oil imports this year will rise by over 9% and that oil demand will grow by 5%, perhaps because robust oil demand in China last year didn't have a spillover impact into the US or Europe markets. We also suspect sentiment in the oil market is being undermined by Obama's speech yesterday where he restated his plan to push for tighter regulation in the banking sector since that could include restrictions on bank trading in commodities. Trading in crude oil has been closely tied to the action in the equity market as a way to gauge the macro economic outlook. Seeing a weak trade in equities and a firmer dollar overnight shows investors scaling back risk which is certainly adding to the selling bias in crude oil this morning. While April crude oil seemed to set a near-term technical low last week, the market's fundamentals and outside influences are clearly having a stronger impact. With sentiment in the oil market being soured by weak oil demand, we suspect a strong bullish surprise will need to be seen in today's reports on jobless claims and factory orders in order to revives macro economic optimism and reverse the oil market's early downward course. Otherwise, April crude oil appears vulnerable to a slide back towards support near $75.75, especially if equities lead a sharp downward retreat.

Natural Gas:
Despite a cooler temperature outlook, we suspect it will still be a challenge for the bull camp to push above strong overhead resistance. While natural gas is being underpinned by a forecast for below normal temperatures in the US heating region through mid-month, it may only provide limited price support unless a more optimistic view for a recovery in industrial fuel demand can take hold. In fact, seeing oil prices retreat overnight on disappointment that US fuel demand remains weak despite signs economic conditions are improving will also be a stumbling block for natural gas. Today's reports on jobless claims and factory orders will provide the market with more economic insight that could impact natural gas trading. So far, March natural gas has failed at attempts to push above the 40 day moving average (at $5.55 today) as we suspect 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. Today's storage report is likely to set the market tone. Most traders are expecting a 121 bcf draw from storage which would still be below last year's draw of 194 bcf and the 5 year average decline of 178 bcf. Therefore, we suspect a larger than expected draw from storage may be needed to support a move over $5.55 this session. Seeing a stronger than expected gain in factory orders could also provide some price support to natural gas this session if it can help to improve the outlook for industrial fuel demand. Otherwise, a slide back to test this week's lows or even lower seems possible. But as long as the cold temperature forecast holds, we suspect the downside in March natural gas will be limited to around $5.28.