Today's Market Guidance

Financial Overview:
After a moderate corrective dip most equity prices have returned to the vicinity of the 2010 highs. Apparently relief over the end of the intense debate over health care reform is enough to rekindle the bullish track in equity prices. Generally positive dialogue on the economy from the Fed overnight seems to be hinting at a coming improvement in the US jobs market and that might also have added into the recovery action that was seen in the prior trading session. With news overnight of a huge monthly Chinese trade deficit reading, some traders might actually discount the prospect of a US/Chinese trade war. The markets might also have been lifted by a rather noted improvement in French Business Survey reading overnight as the French economy lately hasn't been throwing off much in the way of positive economic news. In looking ahead we have to leave the bull camp with the edge, as the February and March up trend pattern looks to have come back into power once again.

DOW:
Like the rest of the market, the June Mini Dow this morning sits right on fresh new highs for the year. Apparently ideas that the jobs market is about to improve and relief over the practical end to the intense health care reform debate is capable of boosting investor sentiment. While the market might see a little choppy action in the wake of the existing home sales report later this morning, the market recently has been able to discount slack US economic data. Therefore, the June Mini Dow looks to respect support today of 10,727 and in turn the market will probably forge even higher highs for the year during the trading session today.

The daily stochastics have crossed over up which is a bullish indication. Rising stochastics at overbought levels warrant some caution for bulls. The market's close above the 9-day moving average suggests the short-term trend remains positive. The daily closing price reversal up on the daily chart is somewhat positive. The close over the pivot swing is a somewhat positive setup. The next upside objective is 10846. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 10811 and 10846, while 1st support hits today at 10679 and below there at 10582.

S&P:
The June S&P has managed a definitive rebound in the overnight trade and is seemingly poised to rise into new high ground despite what could be sloppy existing home sales figures. We would note that equities have generally managed to rally on the charts over the last two months despite a litany of slack US scheduled readings. In the end, less uncertainty and anxiety gives the bull camp ongoing control over prices. Near term support in the June S&P should be respected today at 1162, with very little resistance seen at the old high of 1165.

Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market's close above the 9-day moving average suggests the short-term trend remains positive. The daily closing price reversal up is a positive indicator that could support higher prices. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next downside target is now at 1142.00. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1170.25 and 1175.00, while 1st support hits today at 1153.75 and below there at 1142.00.



NASDAQ:
With the June Nasdaq sitting right on the 1950 level early in the trade it is clear that sentiment generally continues to favor the bull camp. We suspect that the February through March up trend pattern is set to control prices, with the trade generally hopeful of better conditions and earnings ahead. Critical support in the June Nasdaq is seen at 1947.75 and there is only thin resistance at yesterday's high of 1955.00. With the Nasdaq more overbought than other market measures in the latest COT figures, trades might expect to see more volatility in the Nasdaq than in other market sectors.

Bonds:
The Treasury market mostly waffled around both sides of unchanged throughout the Monday trading session, with the 118-00 level in June bonds offering up some type of weak resistance. The markets in general still seem to be seeking a clearer picture on where the US economy is headed and with some housing data due out over the coming two trading sessions, it is possible that Treasury prices might begin to take a little more direction from classic fundamental developments. However, with the market also facing $44 Billion in Two Year Note supply at mid session today and the trade getting those existing home sales figures ahead of the auction, we suspect that trading ranges will be expanded today. We also expect that the shorter end of the market will continue to see relatively more pressure than the rest of the Treasury market, as the trade might feel more comfortable pressing the front end of the Yield curve. With the Fed's Bullard predicting a US jobs gain in March and also suggesting that the US will see its unemployment rate downtick modestly in the 'spring', the US economy would appear to be on the cusp of showing the type of improvement that is expected to put the Fed on a track to raise interest rates. In fact, a Fed Member yesterday even suggested that the policy of low rates for an extended period of time, was painting the Fed into a corner and that type of dialogue should serve to limit the upside capacity of the Treasury market in the near term. However, the market will probably see some type of soft readings from the Existing Home sales figures and perhaps from new home sales figures later this week and that could give the bull camp in bonds the capacity to make the highest highs since early December. Seeing the equity market rebound in the wake of the health care reform passage, highlights how intense debate in Washington over the last two months might have served to keep overall sentiment in the gutter. If the US is able to go forward without Washington headlines dominating the news cycle, then perhaps psychology can begin to improve. With a number of sources and potentially the Treasury market probably set to anticipate something positive from the next monthly Non Farm payroll report, we suspect that the market is once again poised for a minor rally, that could end up being the last thrust to the vicinity of 119-00 in June bonds and to 118-00 in June Notes. In fact, we think the best chance of a rally, over the next two weeks, is in the coming 2-3 trading sessions and that the Treasury market will quickly find that the bull camp will lose its resolve fairly quickly on coming rallies. For the action today, we suspect that the market will be lifted early by the Existing home sales report but we also suspect that the 2 Year Note auction results will barely manage to lift prices further. Critical support in June bonds is seen at 117-24, with similar support in June Notes pegged at 117-06.

Momentum studies are trending higher but have entered overbought levels. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market has a slightly positive tilt with the close over the swing pivot. The next upside objective is 118-110. The next area of resistance is around 118-050 and 118-110, while 1st support hits today at 117-250 and below there at 117-180.

US Dollar:
The Dollar is holding above the prior closing value in the early Tuesday trade but a big Chinese trade deficit reading released overnight, that would seem to tamp down some support for the Dollar. We also think that a better than expected French business survey and up beat dialogue from a US Fed Member late yesterday, have served to take some of the bid out of the Dollar. We also think that reduced political anxiety in the US has allowed global economic sentiment to improve and that in turn takes some of the flight to quality buying interest away from the Dollar. However, if the Dollar is in fact a true bull market, it should be able to transition from a flight to quality driven currency, to a currency being lifted by either the macro economic differential, or by the interest rate differential argument. On the other hand, just because a US Fed member predicts an improvement in the US jobs situation, in the 'spring' doesn't mean that a recovery is assured. The Fed also suggested that the Fed's promise of low rates lingering for a long period of time, is painting the Fed into a corner and that could prompt some to speculate over the prospect of rising US rates. With the Fed's Plosser this morning suggesting that a mis-measured Output gap can hide the need for rate hikes, one gets the impression that sentiment at the US Fed is in the process of change, but the economy would still seem to lack the proof of recovery. For now, unless the Dollar has changed its focus, it should fall back slightly in the face of an improvement in economic psychology.

Gold:
April gold comes into the Tuesday action right around the prior closing value but almost all of the overnight trade was forged above the prior close. The bull camp in gold might be a little disappointed with the lack of renewed buying interest in the Euro this morning, in the wake of better Euro zone numbers overnight. Furthermore, the bull camp in gold might also be a little bit disappointed in the lack of strength in gold prices in the face of generally higher equity prices, especially since Indian gold prices were mostly positive overnight. Perhaps hawkish dialogue from the Fed's Plosser early today and residual strength in the US Dollar have put off some would-be gold buyers this morning. It is also possible that some traders are fearful of a weak US existing home sales report later this morning, as adverse weather was thought to have held back the US economy in the month of February. Apparently news that Zimbabwe gold mines were running well below their capacity because of power related issues was of limited interest to the early Tuesday gold trade and that would seem to suggest that outside market fundamentals, not inside market fundamentals continue to hold sway in the gold market.

Silver:
While the bull camp will point out the overnight attempt to regain the $17.00 level in the May silver contract, the trade wasn't initially able to sustain that rally. While China noted an impressive increase in February silver imports overnight, the silver trade didn't seem to give that news much attention. In fact, the silver market continues to see a number of very bullish private price forecasts this week, but even that hasn't managed to dramatically shift sentiment away from the downward tilt that was generally seen in the prior two trading sessions. Apparently strength in the equity markets isn't providing silver with a lift from its physical commodity market standing, perhaps because the trade hasn't bought into the idea of a solid US recovery yet. With a US Fed member floating what could be considered slightly hawkish dialogue early this morning it is possible that some physical commodity markets like silver, remain concerned about higher US interest rates. While the silver market saw another minor silver exchange warehouse stock decline yesterday afternoon, the silver market doesn't seem to be in a position to embrace talk of tighter supply. The bull camp hopes that favorable equity prices will offset the prospect of weak US data later today, while the bear camp hopes to see the Dollar remain firm.

Crude Oil:
Although close to unchanged levels going into the opening today, May crude oil has held at levels well above yesterday's lows as the market looks to have survived the threat of a long liquidation rout again. The market may be waiting for this week's storage numbers to gain further direction, as demand news may play a key role in getting prices to move out of their recent trading ranges. Quiet action in the Dollar today has helped to consolidate prices within close proximity to yesterday's close and that might give the bulls a slight technical edge. Furthermore, the recovery in U.S. equity prices could help to underpin energy prices, as an extension of that rally could help to take crude oil prices along with it. Once again May crude oil showed extended weakness but it was also clear again that the trade was unable to sustain May crude oil prices below the $80.00 level. It is possible that energy prices were initially concerned Monday about anti speculation regulations but since the Senate AG committee delayed the release of their draft legislation through the end of this week, it is possible that bargain hunting buyers were enticed back into crude oil yesterday. While many trade and Press outlets continue to think that oil prices are too expensive for current economic conditions and for internal supply factors, it would seem like the market is having trouble sustaining pressure on the energy complex. In fact, it is even possible that mild US temps are serving to partly undermine demand views today and it is also possible that uncertainty over the direction of the Dollar is spooking out some traders. However, reports of lower US highway travel in the month of January released Monday, doesn't even seem to be capable of putting crude oil prices down sharply today. Therefore, the action in equity prices directly ahead and the pace of scheduled US economic readings should not be discounted in the coming trading sessions, as that might serve to mitigate what seems to be negative internal oil market fundamentals. We think the path of least resistance is pointing down initially but that the bear camp won't be able to push May crude oil below $80.00 without some extremely negative economic development.

Natural Gas:
While May natural gas has been able to hold a small gain going into the open today, it remains solidly near multi-year lows as the fundamentals continue to remain mostly bearish. Weak demand continues to weigh on this market, and will probably continue to do so until there is a widespread recovery view embraced in the U.S. economy. Near term temps also seem to favor the bear camp today, as the prospect of a sustained late winter cool down are declining with every new weather forecast. While the overall macro economic outlook looks to have improved in the wake of the end of the intense US health care reform debate, that doesn't appear to be enough of a change to alter an entrenched down trend in the natural gas market. We think it will take robust optimism in the US equity markets, a sharply weaker Dollar and perhaps a wide spread wave of buying of physical commodity markets JUST to shut off the downtrend in this market.