Today's Market Guidance

Financial Overview:
Despite open concern of a slack US payroll reading later this morning, the equity market has generally held within striking distance of its recent highs. Perhaps the markets were cheered by the news that the Chinese intended to stick with an appropriate easing stance. While dialogue from the Germans would seem to make things worse, rather than better for their fellow EU member Greece, the Greece situation seems to have generally remained under control. At least in the early European equity market action today the trade saw support from natural resource companies. In looking back, one has to be impressed with the action in the equity market over the last month, as many rallies seem to have come in the face of disappointing economic numbers. It is also clear that the trade is building a case, that weather might have made this month's payroll loss bigger than it might have been otherwise. Therefore, while the market is partially overbought from a technical perspective and a slack number should initially pressure prices somewhat, one should not be surprised to see the market eventually shake off a bad number sooner than might have been expected. On the other hand, a surprisingly small job loss reading might evoke a very big range up move in stock prices. In conclusion, we think the odds of a knee-jerk reaction setback in stocks through the US numbers are high, but the trade might be able to throw off anything but a seriously bearish number (meaning anything more than 75,000 in jobs lost).

DOW:
The Mini Dow would seem to be poised to reach the highest level since January 21st but unfortunately the market might see some temporary back and fill action into and through the US numbers this morning. Up trend channel support in the March Mini Dow is seen at 10,335 today and then again up at 10,362 on Monday. Given a pattern of lower lows this week, one can probably say that the Mini Dow has at least partially corrected the overbought situation that was in place at the start of the week. In conclusion, the technical picture still looks bullish, but the fundamental track clearly has a temporary vulnerability just ahead.

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 upside daily closing price reversal gives the market a bullish tilt. The market has a slightly positive tilt with the close over the swing pivot. The next upside target is 10503. The next area of resistance is around 10478 and 10503, while 1st support hits today at 10390 and below there at 10326.

S&P:
The March S&P in the early going today has managed to forge a fresh another new high for the move and in the process it reached the highest level since January 21st. Up trend channel support in the March S&P is seen all the way down at 1103.45, but we suspect that the market could actually manage to hold at closer-in support of 1118.60, especially if the US numbers show a decline of only 50,000 or 60,000 in the jobs number.

Rising stochastics at overbought levels warrant some caution for bulls. The close above the 9-day moving average is a positive short-term indicator for trend. The upside closing price reversal on the daily chart is somewhat bullish. The market has a slightly positive tilt with the close over the swing pivot. The next upside target is 1130.12. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 1127.25 and 1130.12, while 1st support hits today at 1117.75 and below there at 1111.13.

NASDAQ:
The Nasdaq this week has basically carved out a consolidation zone that is bound by 1844 and 1863 but the odds are good that the market will see a breakout on both sides of that range over the coming trading sessions. We have to give the bear camp the initial edge today, as the prospect of disappointing readings from the US payroll report seem to be rather high. However, as mentioned before we suspect that this market will be able to discount and throw off a modestly disappointing reading. Unfortunately for the bull camp, up trend channel support isn't seen until 1810, with that support level rising to 1815 on Monday. We suspect that the March Nasdaq will respect close-in support of 1840 today, as long as the job loss is less than 75,000.

Bonds:
The Treasury market forged an upside breakout yesterday in the wake of disappointing readings from the US Pending Home sales report and to a lesser degree from the US Factory orders report. We suspect that Treasuries were also lifted by expectations for a soft monthly non farm payroll reading later today. Perhaps protests in Greece are also prompting some minor flight to quality buying of bonds and notes in the early going. It is even more surprising that Treasuries managed the afternoon rally Thursday, in the face of fresh supply side news from the US Treasury. In fact, the US Treasury apparently plans to sell $74 billion in 3, 10 and 30 Year instruments next week, and in most cases that type of news should have limited the upside. However, the focus today will be on the monthly payroll report from the US, with the market seemingly in a position to make even a minimally disappointing reading into temporarily supportive event for Treasury prices. Our estimate on the range of estimates for the Payrolls is from a 20,000 job loss to as much as an 80,000 job loss. As for the unemployment rate, we suspect that the market might see an up tick, as a prior month's improvement could be reversed. It is also clear that many players think that weather adversely impact the jobs figures this month and that is probably why estimates for the amount of jobs lost has steadily increased over the last week. In the end, the Treasury market seems to be willing to embrace bullish developments with more fervor than bearish developments, but it is also clear that the trade is already leaning heavily toward the bull case and therefore a loss of jobs of less than 30,000, might serve to yank the rug out from under the Treasury market. However, unless there is a big surprise from the data, we suspect that June bonds will be mostly able to hold around close-in support of 117-20, with similar close-in support seen in June Notes at 117-12. All things considered, we wouldn't be surprised to see a bigger payroll loss than expected and for the market to quickly discount that reading after an initial upside reaction. Therefore, our bet for a high today in June Bonds is 118-14, with a similar high price for June Notes seen up at 118-03. Given the intense focus on the US recovery/no recovery question, it is also likely that the trade will give the wage readings in the report some additional scrutiny. If the job loss isn't an upside surprise, we would bet that the figure will eventually be revised upward in subsequent monthly reports. Certainly the Greek protests could provide an added measure of flight to quality buying of Treasuries into the weekend, but at this hour the protests did not appear to be poised to run out of control. With a Greek Minister this morning indicating there was no need for additional budget adjustments that could serve to calm domestic anxieties inside Greece. For aggressive traders, one might consider getting short a spike rally this morning, as the market will then be left to face another tranche of heavy supply in the wake of today's fireworks.

US Dollar:
At least in the early going today, the currency markets are confused with Greek debt saga developments. Earlier in the process the Dollar might have been bid up off rather aggressively off comments from the Germans who want to make it clear that they won't give money to the Greeks. On the other hand, the trade is suggesting that a move might be afoot to assemble some type of credit market support for Greece funding but it is unclear how that will unfold. While there were reports of protests in Greece overnight, the Press sources reporting from inside that country didn't seem to think that the protests were set to get ugly. Therefore, the US Non Farm payroll reading looks to dominate the Dollar action over the EU debt situation today. With a quasi US Administration official suggesting earlier in the week that the upcoming numbers might be heavily impacted by severe weather, it is possible that the payroll loss could be bigger than expected. However, our feeling is that the number will be worse than expected but that the trade will be able to discount a modestly weak number. In the end, seeing Greece pay twice as much as Germany for a recent debt offering, seeing such strong comments from Germany toward Greece overnight and seeing the patently dismal long term EU growth prospects from the EU leadership this week, would to mean that the Dollar is set to remain in favor. In fact, it might even be possible for the Dollar to rally today in the face of a bad number, as the US looks to maintain the upper hand in both the macro economic and interest rate differential debate with the Euro.

Gold:
The April gold contract comes into the Friday morning early trade perched above the 100 day moving average, which comes in today at $1,110.70. Once again the Indian trade wasn't overly interested in the long side overnight, but it also seems as if the Indian gold trade recently has become a following market instead of a leading market. Like the stock markets, the gold market has mounted a fairly impressive trade over the last month, with the trade at times capable of mounting gains in the face of weak US economic data. However, the US monthly jobs figures are usually seen as the beginning of another monthly cycle of US data and therefore volatility in the wake of the numbers later this morning is expected to be rather high. Clearly gold can rally in the face of weak numbers, but it isn't always clear whether gold can rally in the face of weak numbers and a strong US Dollar. Therefore, the reaction in the Dollar this morning to the numbers might be the final arbiter today. The gold bulls will suggest that part of a weaker than expected number has been factored in already, while the bull camp in gold might suggest that the weakness in the figures today was mostly a one off weather related issue. The bull camp might also attempt to make something positive out of any ongoing rise in wages in the report later today.

Silver:
The May silver contract seems to have encountered some resistance on the charts this week around the $17.37 level. Not surprisingly, the May silver contract also seems to be waffling around both sides of the 100 day moving average, which comes in at $17.32 today. Many traders expect silver to behave like a physical commodity in the wake of the Non farm payrolls from the US today. In other words, some traders think that patently soft US numbers will provide a slide in silver prices, while as expected, or slightly better than expected numbers, could serve to lift silver prices. Other traders are concerned that the Dollar action might complicate the trade in silver today, but with favorable equity market action and higher copper price action early today, silver does appear to be getting some outside market support. The silver bulls have to hope that bad US numbers are discounted, as weather impacted, while the bear camp has to hope that the numbers are even worse than current expectations. The bear camp might also point out that May silver to this week's high, was a startling $2.71 an ounce above the early February lows.

Crude Oil:
Crude oil has seen a firmer trade in the early overnight action with stronger global equity markets and a better oil demand view helping the market bounce back from yesterday's currency connected sell off. Crude oil gained on optimism for China's oil demand to remain strong after the country's Premier indicated that monetary conditions would remain loose while an active fiscal policy would be maintained. This has alleviated some concern that oil demand from the world's second largest consumer would be crimped if China started to aggressively tighten monetary policy. A steady to slightly weaker Dollar overnight has taken the currency connected selling pressure off oil markets seen in yesterday's session. Oil is also being supported by a more optimistic macro economic view being thrown off by the gains in global equity markets tied to yesterday's stronger than expected news on US retailer sales and a drop in US jobless claims which seems to have improved oil demand sentiment in the overnight trade. A report forecasting a sizable drop in OPEC exports in the four weeks to March 20th may also be helping to improve the supply outlook. Stepped up Nigerian militant attacks on oil facilities, tensions over Iran's nuclear program and threats of a tanker attack in a major shipping lane in Singapore have also provided geopolitical risk support to oil prices. With crude oil bouncing back overnight it clearly seems as if oil markets retain an upward price bias. The chart action for April crude oil has been positive with the market setting higher lows and generally higher highs over the last five sessions while price breaks so far haven't seen any follow through. Eventually we see April crude oil retesting the January highs. But since the bull camp still needs to over come some obstacles including an overbought technical condition and high fuel supplies a much more optimistic view toward a recovery in oil demand will need to take hold. Today's highly anticipated employment report will provide additional economic insight and certainly influence oil price direction with most traders looking for payrolls to decline by about 65,000. Therefore, given the oil market's sensitivity to the currency action we suspect a bullish surprise may need to be seen in today's employment data that also doesn't cause a significant run up in the dollar in order for April crude oil to make a push above this week's highs. Otherwise, given the market's overbought condition, crude oil could be hit by profit taking if the Dollar traders sharply higher off the economic news.

Natural Gas:
While natural gas has steadied a bit following yesterday's sell off tied to a disappointing storage draw, the market remains in a well defined down trend that could eventually pressure prices back towards the $4.15 level. With daily indicators falling to oversold extremes, there would seem to be some near-term upside price risk for short position holders due to the market's technical condition. But it's clear from yesterday's price action that bearish sentiment remains entrenched and that a technical bounce is likely to be short lived. With yesterday's natural gas storage report showing a draw of 116 bcf, which was below most traders expectations for a 131 bcf decline and also below average for this time of year suggest winter heating demand has likely peaked for the season. This view is supported by private weather forecasters predicting milder temperatures ahead. The economic recovery remains patchy and that suggests industrial fuel demand will likely be slow to return. As a result, traders have started to price in robust build up in natural gas supplies during the injection season since the steady rise in the number of drilling rigs in operation suggest producers are stepping up output. Today's employment report will provide additional economic insight and perhaps inspire some short covering if payrolls drop less than expected. The wide price spread against crude oil in Btu terms may also attract some bargain hunting buying to natural gas. But as of the last COT report, funds were only 78,890 contracts net short natural gas and well below the nearly 300,000 contracts net short level reached in July 2008. That setup suggests the market may still have ample selling capacity if the employment data is seen as bearish. Overhead resistance for April natural gas is at $4.66 then near $4.80 with support at $4.411 then near $4.258.