Today’s Market Guidance

Financial Overview:
While the stock markets around the world seem to think that the EU is poised to come through for Greece in the wake of their meeting this morning, the failure to do enough could result in a fresh leg down in global equity prices. With the stock market also presented with fresh concerns of rising US interest rates (off the Bernanke prepared testimony) and political confusion expected to resume its flow from Washington, we are somewhat surprised that equity prices are starting out higher today. In fact, we aren't even sure if a round of up beat macro economic reports is capable of offsetting a poorly constructed EU Greece bailout offer. With a number of well known fund managers making some very disturbing predictions on the potential for sovereign debt defaults the issue of debt is certainly hanging in the wings like an 800 pound gorilla. With the US 'jobs bill' efforts expected to resume after the weather induced pause in Washington, we suspect that investors will continue to fret over what will be brought forward. Since most legislation from the US has discounted classic economic principles, it is no wonder that the market is fearful of attempts to 'help' the economy. The markets might bounce early today off ideas that the Greece thing will be temporarily contained, but the devil might be in the details with that EU plan. The bias is up early but traders should be prepared for the market to turn on a dime.

DOW:
While the bull camp might appear to have the edge in the early action today, there is a lot of potential uncertainty facing the market in the trade today. In addition to the post EU meeting decision on the Greece bailout situation, we suspect that Congress will crank up the spending machine with efforts on the third stimulus package of the last year. While the bull camp might be targeting the 100 day moving average up at 10,121, we would suggest that a pulse up to that level early today could end up being a high as the EU debt bailout might eventually be judged to be mostly smoke and mirrors.

Daily momentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1st swing resistance. The close below the 9-day moving average is a negative short-term indicator for trend. It is a slightly negative indicator that the close was under the swing pivot. The near-term upside objective is at 10117. The next area of resistance is around 10049 and 10117, while 1st support hits today at 9921 and below there at 9860.

S&P:
While the March S&P has managed a series of higher lows this week it also hasn't been able to forge a series of higher highs and that highlights the markets lack of consensus. Unfortunately the 100 day moving average in the March S&P up at 1087.00 seems somewhat out of reach for the news facing the market this morning. However, we would not be surprised to see the March S&P make an attempt at this week's highs of 1076.50 in the wake of the EU/Greece plan or package. On the other hand, we doubt that the market will sustain on the upside tilt unless Bernanke or the Fed surprises the market with statements designed to tamp down the rekindled fears of rising interest rats. Furthermore, for the bull camp to regain full control today might also require a shift in equity market sentiment toward the upcoming Washington jobs offering.

Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above resistance. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The market's close below the pivot swing number is a mildly negative setup. The next upside objective is 1080.06. The next area of resistance is around 1071.37 and 1080.06, while 1st support hits today at 1055.13 and below there at 1047.57.

NASDAQ:
As suggested already in other market areas, the Nasdaq might have an initial positive bias because of favorable expectations for the EU bailout news but we suspect that optimism will wane after an early rally as the market will probably reiterate its fears of rate hikes in the US later in the session. Clearly the Nasdaq has a pattern of rising lows this week, but it should be noted that the Nasdaq was not able to forge a pattern of higher highs. We can't argue with an attempt at the 100 day moving average up at 1776.95 early today but the bull camp will have to weave its way through a series of potential negatives to sustain higher action throughout the trading session.

US Dollar:
With global equity prices showing some initial gains and the markets in general anticipating something positive from the EU meeting with respect to the Greece situation these influences are applying some pressure to the US Dollar. However, we just don't think that the Greece situation is going to remain 'fixed' once the trade is allowed to go over the EU bailout package with a fine toothed comb. However, the Dollar bears look like they might have to face a series of minor negative developments this morning as the EU bailout hope and expectations for a decline in US initial claims reading are both capable of undermining the Dollar. However, Washington will probably step back into its spending mode today and the US is expected to see a somewhat disappointing mid day auction of 30 Year bonds and that could present the Dollar with a wildcard situation. In other words, we suspect that most of the information today will be Dollar negative, but in the event that equities start to fall apart and the global macro economic outlook deteriorates that could switch on flight to quality buying of the Dollar later in the trading session. At least in the early morning action the bear camp appears to have an edge, but the Dollar does have up trend channel support down at 79.77 and that could be a solid support zone.

Gold:
With slightly weaker US Dollar action, slightly higher equity price action and initial hopes of something positive from the EU meeting, one might have expected to see gold prices trading higher in the early US trade. Furthermore, one might have expected the gold market to get some support from overnight news that South African gold production for the month of December showed another annual decline of almost 9%. However, the gold market just hasn't embraced news of declining physical gold output and that in turn suggests that outside market forces are expected to remain in mostly control of gold prices. It is possible that gold will see a lift if the EU actually discloses its Greece bailout details today but the real question might be, will the markets fully buy into the EU effort. While gold has shown some upside action this week, the Chinese New year looms directly ahead and that extended holiday period might be seen as a lid or cap on gold demand in the coming trading sessions. In short, the bull camp in gold today, seems to need positive leadership from the equity markets and perhaps even good US numbers to effectively get out from under residual global debt and slowing fears.

Silver:
While May silver has managed to generally hold above the prior session's closing level overnight, the bulls have to be a little disappointed with the failure to distinctly benefit from a slightly weaker US Dollar and minimally higher early equity price action. However, despite the slightly positive early bias in equities this morning, a number of markets and analysts remain concerned about EU debt problems. As suggested in the gold coverage this morning, there appears to be hope that the EU will offer Greece a bailout package today, but it isn't a given that the details of the bailout plan will actually be known today. While the silver market could be expected to benefit from potentially favorable US initial claims data and the market could also garner some support from hopes of progress on a US jobs bill, those factors don't appear to be primary market forces in the early Thursday silver trade. In the end, the action in the equity markets looks to be very critical to the direction of silver today but with the silver market chopping around unchanged levels in the face of early gains in US equities, the positive correlation between equities and silver is somewhat suspect. It should also be noted silver did see a noted 1.5 million ounce decline in silver exchange stocks but the market recently hasn't been that interested in slightly bullish physical supply developments.

Crude Oil:
Crude oil has managed a firmer trade overnight with price support coming from energy agency forecasts for stronger global oil demand growth this year along with optimism over the prospects of an EU aid package for Greece. April crude oil was able to push to a new high for the week after the IEA lifted its global oil demand growth outlook for this year to rise by 1.6 million barrels compared to last year which comes on the back of the EIA yesterday expecting a 1.2 million barrel per day global demand growth this year. This more optimistic demand view has so far enabled the market to shrug off a bearish API inventory report which showed 7.2 million barrel climb in oil stocks and a clear indication that US oil demand remains very weak. Still, the market seems to be cheered by prospects for oil growth this year to come from emerging markets such as China. In fact, a report showing a subdued Chinese inflation reading and Chinese banks lending more than expected last month seems to be easing concerns that China will aggressively tighten credit which could threaten oil demand growth. Oil markets have also gained on growing expectations that European leaders will come to a political agreement to help Greece manage its debt at the EU summit today and that an actual aid package will be developed next week and that seems to be easing concerns for now that European sovereign debt problems will restrict growth and oil demand in the region. Part of the strength in oil this morning may be geopolitical since the US tightened restrictions on companies linked to Iran while Western leaders are moving closer towards imposing more sanctions on the country as Iran moves forward with their nuclear program and as more government protests are expected as Iran celebrates its Islamic Revolution Day anniversary this week. Outside market influences are also providing early strength to oil markets with gains in equities and a mostly weaker Dollar tied to hopes of an EU aid package for Greece which has raised investor risk appetite to crude oil's benefit. Seeing April crude oil this week make higher high and higher lows clearly shows the market to be in the midst of a technical correction from the steep sell off from the January high. In fact, the move above $75.59 puts the next retracement target for April crude oil at $77.38. The bull camp clearly has the early edge and while we are skeptical that price gains off a better global demand outlook will ultimately hold, the delay of some of the economic news until tomorrow and the EIA inventory report until Friday at 10 am central may turn trading more technically based and that could give crude oil some additional upside traction. But we also suspect the bull camp will need favorable currency and equity market action to keep oil supported up at these higher price levels, otherwise, if the Dollar starts to gain upside traction it won't be surprising to see April crude oil head back below the $75 price level. Close in overhead resistance is at $75.82 then $76.13 with support near $74.91 then $74.57.

Natural Gas:
Natural gas has traded firmer in the early overnight action with price support perhaps coming from wintry weather conditions and expectations for a large storage draw this week. A second snow storm in the Northeast this week and frigid temperatures in the Midwest over the next two weeks may provide bouts of strength to natural gas on expectations for a rise in heating demand. In fact, the market could edge higher from current levels since expectations for this week's natural gas storage report is for a 184 bcf decline which would be above last year's 164 bcf draw and the 5 year average draw of 155 bcf. The EIA has delayed the storage report until Friday at 9:30 am central. But while April natural gas may firm a bit from current levels, we don't think the market will be able to hold at higher price levels. With winter is winding down, there seems to be a growing concern that natural gas supplies could quickly build up again once heating demand fades since industrial fuel demand has yet to show any signs of recovery. Yesterday the EIA released it supply/demand outlook for natural gas and only a.4% rise in natural gas demand is expected for this year and next. While the EIA also expects production to fall by 2.6%, the rising number of working natural gas rigs in operation still leaves the supply outlook bearish for this spring unless industrial fuel demand starts to recover. Therefore, it won't be surprising to see April natural gas eventually slide back and test the January low.