Today's Market Guidance

Financial Overview:
A big range up extension in the prior trading session seems to have come because of ideas that a hawkish Fed, must mean that the Fed is confident that the US economy is recovering. It also appears as if the market continues to get a consistent lift from merger and acquisition activity and that might be why the market has seemingly managed to rise in the face of slack scheduled economic readings. In fact, we suspect that the market will be confronted a series of slightly disappointing economic readings over the coming three trading sessions but we are not sure that is going to foment much in the way of negative sentiment toward equity prices. Some traders will suggest that failing to hold the bulk of the sharp run up in the prior trading session, hints at a bit of exhaustion in the bull camp. Given the bullish bias in sentiment, it might take a series of weaker than expected private jobs figures, to prompt a noted profit taking wave in the equity markets. In fact, given the tone of Fed members recently, it is even possible that the Fed Beige book release early this afternoon will provide the stock market with a minimal lift. Unless something patently negative surfaces in the headlines this morning, we expect profit taking selling to be minimal and therefore the bull camp looks to retain an edge.

DOW:
While the Mini Dow forged another new high for the move and sharp thrust higher in the prior trading session, the market gave back a moderate portion of that rally into the close yesterday. However, we see critical support at 10,381 and then again down at 10,371 in the March Mini Dow contract, with the bull camp seemingly retaining an edge. It is possible that early private jobs data will provide a slight undermine, but we just don't get the impression that the market is going to be turned downward off today's data. Upside resistance in the March Mini Dow is seen up at 10,500.

Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 10482. The next area of resistance is around 10441 and 10482, while 1st support hits today at 10365 and below there at 10330.

S&P:
So far the pattern of higher lows and higher highs leaves the bull camp in control of the stock market. Surprisingly, the markets aren't being undermined by hawkish Fed dialogue or even by slack US scheduled data flows. Therefore, the market probably won't be undermined as a result of potentially slack US private jobs data today. While we aren't sure that the March S&P will have the buying fuel to test the 1125 level today, it is possible that the S&P might test that level before the Friday morning jobs number spooks some weak handed longs out of position.

Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market's close above the 9-day moving average suggests the short-term trend remains positive. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 1127.62. The next area of resistance is around 1122.50 and 1127.62, while 1st support hits today at 1112.50 and below there at 1107.63.

NASDAQ:
One shouldn't be surprised that the Nasdaq mounted an aggressive run up in the prior trading session, as merger and acquisition activity seemed to be providing the Nasdaq will a distinct lift. However, the Nasdaq seemed to reach an overdone technical and perhaps even fundamental level, with the rally yesterday and then ended up giving up a large portion of the gains into the close. With the market waffling around the 1852.25 level in the morning trade today that would seem to make the 1850 level as a critical pivot point in the early trade today. We don't see the justification for a sharp upside extension in prices, but we do think that the March Nasdaq will manage to entrench and build support around the 1850 pivot point.

US Dollar:
Not surprisingly the markets have taken the flow of scheduled data from the US and the developments in Greece as a negative to the US Dollar. Apparently the markets see the latest Greek austerity program of $4.8 to $5.0 billion Euro as sufficient and that looks to keep the Dollar under a bit of pressure. So far, Greek protests haven't been given too much credence and that would seem to suggest that the debt crisis will remain under control for now. It also seems as if a number of markets have taken recent hawkish dialogue from the US Fed as a sign, that the Fed has ultimate confidence in the ability to see recovery in the US economy. Even if the markets aren't expecting a quick recovery in the US economy, it does seem as if the expectation of higher US rates is on the rise and even that angle hasn't provided the Dollar with much buying interest. In short, instead of showing residual bullishness, the Dollar is under pressure off declining flight to quality concerns. However, once the long liquidation off a temporary improvement in the Greece situation is factoring into prices, it is possible that the Dollar could begin to see an influx of capital off the prospect of rising US rates. Therefore, we wouldn't be surprised to see the March Dollar index slide to lower support of 80.19 before a solid low is forged.

Gold:
In looking at the magnitude of the gains in gold in the prior trading session, one almost got the impression that 'investment interest' was returning. Clearly a weaker Dollar and rising equities gave some credence to the prospect of recovery ahead, but in some cases it almost appeared as if hawkish US Fed dialogue was being interpreted as a development that signals a recovery in the US economy. In the end, seeing a rally in gold prices in the face of hawkish Fed dialogue and also seeing strength in the face of mostly slack US scheduled data has to embolden the bull camp and discourage the bear camp. It does appear as if favorable Indian demand patterns have provided some support to gold prices, but many traders think that gold strength is generally coming from outside or bigger picture elements. At least in the early action today, it would appear that calm in the Greek situation will give the bull's some added confidence, while the bear camp will attempt to play up the prospect of weak jobs news from the US economy. For most of the last two months, the gold market has acted like a physical commodity market and therefore the tight correlation with equities is likely to continue to impact gold prices.

Silver:
The Silver market has managed another new high for the move today and in the process it has managed to rise within close proximity to the 100 day moving average of $17.33. Clearly silver appears to be up beat toward the prospect of global growth, in the wake of an improvement in the Greek situation. It almost seems as if silver and other physical commodity markets have taken overtly hawkish dialogue from the US Fed, as a sign that the US economy 'must' be improving. In other words, if the Fed is feeling the need to tighten, they must be seeing signs of progression in the US economy. In the short term, weakness in the Dollar and a lack of concern toward the economy looks to favor the silver bulls, while the bear camp will look to potential weakness in upcoming US jobs figures and further debt problems to stem the current rise in silver prices. The bear camp might also be hopeful that US monthly payroll readings on Friday morning will serve their case better than the economic psychology seen in the first three days of this week. In the end, classic supply and demand news in silver is minimal and seemingly unable to unseat the focus on outside market forces.

Crude Oil:
Crude oil has seen a choppy two sided trade overnight but the market seems to have a positive bias since oil has so far held up fairly well despite the bearish API reading. API reported a jump in oil stocks that were twice as high as expectations but the trade seems to be instead focusing on a much sharper than expected decline in distillate stocks. A weaker Dollar and firmer Euro have also provided some price support to crude oil in the early going on rising investor risk appetite. Also, news that Greece has adopted more austerity measures seems to be providing a bit of macro economic optimism to the oil markets. But so far the buying conviction in crude oil up at these high price levels hasn't been that strong leaving the market still looking a bit fragile. While macro economic sentiment seems to have improved, the demand outlook for oil remains sketchy typified by news that Japanese crude oil stocks fell to a three month low on week refinery demand and inventory adjustments ahead of Japan's fiscal year end in March. Oil markets have been closely following the ebb and flow in the equity market and overnight gains in oil have likely been limited by a lack of clear direction in equities which have only managed to edge higher at times despite the positive news on Greece. But crude oil may be in a holding pattern ahead of a variety of market impacting reports on inventories, US service sector growth and private employment. Most traders are expecting the EIA report to show a 1.3 million barrel gain in oil stocks and a rise in gasoline stocks, but a nearly 1 million barrel drop in distillate supplies. But in the end, the economic news and outside market influences may have more of an impact on oil market direction, especially if the inventory report comes in close to expectations. While April crude oil has consistently failed up at these price levels, the market has also held around the 40 day moving average on price breaks which comes in at $78.04 today. Yesterday's probe above the February high would also seem to give April crude oil more of an upward tilt. We get the sense that crude oil will make another upside run attempt this session and seeing a close over yesterday's high will put April crude oil on course to test the January high. But if another failed rally attempt is seen, we suspect the $78.00 in April crude oil is likely to hold.

Natural Gas:
Natural gas has traded a bit firmer at times overnight and with the market becoming technically oversold, natural gas may be able to edge higher before challenging the December low at $4.595. Daily indicators for natural gas have fallen to an oversold extreme and if today's ISM service sector index can provide a better macro economic view, it could leave the bear camp with some near-term short covering risk. Natural gas may also be pulled a bit higher if the oil market gains upside traction off today's inventory report. Some short position holders in natural gas may be inspired to take profits ahead of this week's inventory report which is expected to show a 133 bcf draw from storage which would larger than the 101 bcf decline see last year and more than the 5 year average draw of 124 bcf. But while we suspect a technical bounce in natural gas may be close at hand, we still see limited upside potential for the market until a more optimistic view for a recovery in industrial fuel demand can take hold. In fact, if natural gas can manage a technical short covering rally, it will provide a fresh selling opportunity for traders. As heating demand fades, there is the risk that the steady rise in the number of drilling rigs in operation, up 36% since July and higher LNG imports this year will build natural gas storage supplies to burdensome levels again during the injection season if industrial fuel demand stays weak. Sine the weather forecast lacks consistent cold over the next two weeks, a technical rally in April natural gas may be limited to the $5.00 price level while an eventual price break towards $4.15 seems possible.