Today's Market Guidance

Financial Overview:
While US stock market measures haven't managed to forge fresh new highs for the move in the early going today, it should be noted that the markets forged a bit of an aggressive liquidation yesterday morning and they were able to reject that selling pressure. As in the Treasury market, we don't see much in the way of fresh scheduled economic news due out today, unless the market takes a larger than normal cue from the weekly mortgage application report. The overnight headlines saw the OECD predicting economic growth to actually slow in the first half of 2010 (within the G7) and that in conjunction with an unchanged Euro zone 4th quarter GDP reading, is hardly cause for cheering. In fact, the OECD also suggested that the German economy might have contracted in the 1st quarter and that economy was supposed to be the stalwart or leadership sector of the Euro zone. While there are expectations of a robust Canadian economic reading later today, the overall macro economic view this morning looks to start out on weak footing. However, the US equity market recently has managed to throw off negative sentiment and remain within a well defined up trend pattern on the charts.

DOW:
As suggested in the introduction today, the US stock market has been able to respect up trend channel for almost 2 1/2 months and that would seem to leave the June Mini Dow with support today at 10,861. Perhaps the US markets are seeing some support from merger and acquisition interest earlier this week but we don't expect that angle to provide additional support today. The market will be presented with three separate speeches today from current Fed members and or past Fed members and that could provide a surprise reaction in the marketplace. In the mean time, we don't see the need to aggressively embrace the long side today, as the trend appears to the only key argument for the bull camp in the early going today.

Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next upside target is 10973. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 10959 and 10973, while 1st support hits today at 10899 and below there at 10853.

S&P:
The S&P would appear to be coiling in the early action today and since that coiling action comes after a new high mmove, that tends to foster ideas of upcoming weakness. Up trend channel support in the June S&P is seen at 1174.40 this morning and we wouldn't rule out at least a temporary test of that level in the trade today. The bulls lack fresh recovery fodder, while the bear camp doesn't seem to have an overly strong case to force prices downward.

A new contract high was made on the rally. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market's short-term trend is positive on the close above the 9-day moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside objective is 1195.06. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1191.37 and 1195.06, while 1st support hits today at 1180.63 and below there at 1173.57.

NASDAQ:
The June Nasdaq seems to have forged a quasi blow off top in the Tuesday action and it could take something positive to throw off a weak corrective tilt. The market will see earnings from Bed Bath and Beyond today and that could give some investors a fresh cue on the direction of the economy. With Intel earnings not due out until next week, we can't rule out waffling around both sides of 1973 in the coming trading sessions. Up trend channel support in the June Nasdaq is seen all the way down at 1960.60 but we doubt that the market will see that type of washout today, unless there is a universal call for higher US rates from the Fed.

Bonds:
The Treasury market enters mid week in the midst of a slight short covering rally. While equity prices have weakened and the overall macro economic outlook seems to have downshifted ever so slightly we have to think that the majority of the upward action this week is coming compliments of technical short covering. Some might suggest that Fed comments yesterday regarding the need to continue supporting the economy until job improvement is entrenched, is cause to bid up prices somewhat. Separately another Fed member yesterday suggested that it was still too premature to raise rates and that deflation was still a threat. However, one could also find a measure of hawkish dialogue within the FOMC meeting minutes even though those opinions were formed prior to the recent Non Farm payroll improvement! With $21 billion in 10 Year Notes to be auctioned at mid session and the two prior auction legs showing either slack or marginal interest we can't be that upbeat toward the longer maturity auction later today. However, with the morning trade mostly devoid of even second tier scheduled economic data flows, the Treasury market might derive some macro economic sentiment from the action in the equity markets, which are showing marginal losses in the early Wednesday trade. We also don't see as much concern toward the Greek debt situation this morning to drive flight to quality buying interest toward US Treasuries, but little has changed in that situation and therefore it is possible that Bonds and notes will see some type of underpin from that situation. Some Press outlets are suggesting that US/Chinese tensions are easing a bit with the US Treasury Secretary scheduled to meet with the Chinese Vice-Premier and the US President supposedly scheduled to meet with the Chinese leader at an upcoming summit. Therefore, the fear of slack demand for longer term US maturities from China might be downplayed into the action results today but we doubt the auction today will end up being a source of aggressive buying interest. In short, we would be a little surprised to see June Bonds manage a sustained rise above 115-03 resistance, with June Notes seeing similar technical resistance at the 115-20 level. On the other hand, seeing the June Notes fall back below close-in support of 115-09 and seeing June bonds fail to hold above 114-18 could serve to push an additional layer of longs out of position. The most likely outcome today is to see additional consolidation or sideways action, which could eventually serve to balance the recently oversold technical condition of the market. Regardless, we suspect that the market will need a 'fresh negative' catalyst in the form of a strong scheduled economic reading or a verbal threat of rising rates from one of the three separate speeches from current and past Fed members today to result in new lows for the month.

Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market's short-term trend is negative as the close remains below the 9-day moving average. The market has a slightly positive tilt with the close over the swing pivot. The next downside target is 114-000. The next area of resistance is around 114-280 and 115-070, while 1st support hits today at 114-090 and below there at 114-000.

US Dollar:
Although the Dollar hasn't managed to take out its prior high early today it has held on to most of the gains made yesterday against the European currencies. With no major economic numbers scheduled for release in the US today, the focus has still been on the contrast between this morning's weak Euro Zone data and the recent strength in US numbers. Recent comments made by Fed officials, along with yesterday's release of the March 16th FOMC minutes have hinted at their reluctance to begin raising US interest rates and that could simply help the Dollar from a macro economic differential argument. While that verbal dialogue from the Fed may have ultimately taken some of the strength out of the Dollar, today's OECD estimates for first quarter 2010 GDP growth were raised to 2.4% for the US, while Germany's was lowered to -0.4%. As long as the US economy appears to have a competitive advantage over other major economies, the Dollar should remain well supported on the charts. Furthermore, it would also seem like the trade remains concerned about the Greece situation, despite a lack of fresh headline developments on that subject. The June Dollar Index should have an upside target of 82.10 over the near term.

EURO:
Any strength that the June Euro may have come into this morning with has been derailed by weak Euro Zone economic data forecasts, and also by today's OECD estimates of flat European growth during the first half of 2010. Although the Greeks have denied it, fears that they were looking to change their debt aid package continues to weigh on the euro currency. Official EU stats released this morning suggested that 4th quarter Euro Zone GDP fell 2.2% year on year, and that the February Euro zone PPI was up only up 0.1% for February. With such weak numbers it is difficult to see how sentiment would change that dramatically and for the June Euro to make a strong move higher against the Dollar in the near term might be very difficult. In fact, private US chain store sales figures might add an additional layer of optimism toward the US economy. Therefore, look for a retest of last month's lows, with a near term downside target of 1.3312.

Gold:
While the London gold fix was a touch higher than the Tuesday PM fix, the AM peg this morning was markedly above the Tuesday morning AM fix. The bull camp is suggesting that the ability to hold above the 100 day moving average at $1,122.30 is bullish, while the bear camp might point to yesterday's high of $1,139.60 as some form of resistance today. Fortunately for the bull camp, the trade doesn't seem to be overly concerned about a near term deterioration of the Greek bailout debate, but with mostly slack Euro zone economic predictions from the OECD overnight, the prospects of a weaker Euro are possibly improved. The Indian gold market overnight was only marginally higher overnight and that seems to have benefited the bull camp, as June gold as of this writing was trading from $1 to $1.5 per ounce higher. It is also possible that higher Indian and Asian equity market action overnight also contributed to the initial bullish tilt in gold prices this morning. More than likely positive price action in platinum and palladium also contributed to the early bull case in gold this morning.

Silver:
Silver exchange stocks for April 6th were 116.450 million ounces up 384,035 ounces. Silver exchange stocks generally continue to show a pattern of daily builds. May silver looks to start the Wednesday trade right on the even number $18.00 price level, which is well above the 100 day moving average which sits down at $17.31 today. At least initially today the silver market is seeing a slightly stronger US Dollar and weaker US equity prices but that potential negative tilt is at least partially offset by positive leadership from platinum and palladium prices. After seeing silver diverge a bit with gold in the prior trading session, traders are initially seeing silver out perform gold in the early Wednesday trade. As indicated in the gold coverage today, the US report slate is mostly thin today and that could leave Fed dialogue or action in the US equity markets as a key driving force for silver prices.

Crude Oil:
Although May crude prices have drifted lower overnight, they still remain within sight of the high for the move this morning. However, the Dollar is slightly higher, US equities are a touch weaker and there is little on the US economic report front this morning. While some might suggest that the market's focus will be squarely on this morning's EIA storage data, we think that the focus will remain on the direction of the global economy. In the overnight trade there was evidence of slack Euro zone growth but favorable price action in Asian equity markets. A private industry survey on inventories released after the close yesterday provided little in way of surprise for the energy markets, as they saw a continuation of the recent trend of crude oil stocks builds and product stock draws. However, yesterday's monthly EIA Global Demand report predicted that global oil demand 'growth' would be slightly lower from last month's estimate, but they also projected that US summer gasoline prices would rise rather significantly above last years average. Overnight China also noted that their largest refineries were scheduled to hit record throughput levels in the month of April and that really speaks loudly about one major energy demand source. However, the crude oil market is slightly overbought on the global demand angle and we get the sense that prices need a bit of back and fill action to balance the technicals and perhaps even factor in the EIA inventory readings later this morning. Near term corrective support in June crude Oil today is seen at $86.63.

Natural Gas:
May natural gas has managed to hold above the prior close early this morning, but the charts don't look very impressive. While we suspect that the natural gas market has forged some type of major long term bottom, there is still a tremendous amount of supply to work off and the prospect of a change in US energy policy is rife with pitfalls. However, given the net spec short position in natural gas in the last COT positioning report, we suspect that the recent rally was mostly the result of technical short covering and not off fresh outright long term buying. With the regular petroleum complex seeming faced with an overbought corrective tilt and the overall macro economic outlook lacking fresh news items today, we would think the bear camp holds the edge in natural gas today. However, the market did see a US government prediction in the prior trading session, that pegged US industrial electricity use was set to gain 2.9% in 2010 and the fear of sagging industrial use for natural gas might have been the primary reason for the pounding of natural gas prices over the last two years! Therefore, we are now looking for a correction back to the $4.10 level in June to establish some long term bull plays.