Today's Market Guidance

Financial Overview:
The stock market remains in a profit taking mode into the early Thursday morning trade. Overnight the markets seemed to be under pressure because of a combination of US rate hike fears and also because of lingering Greek debt concerns. We don't give the US rate hike fears that much credence because the US Treasury market was still holding within striking distance of yesterday's highs in the overnight trade. With Greek bank and financial shares under some pressure overnight and widening credit spreads seen for that country overnight we have to give some credence to the idea that renewed Greece concerns are providing the global equity markets with some fresh selling pressure. We also think that some longs are exiting positions because a lack of fresh evidence of growth from the US economy this week. Surprisingly, favorable UK economic data overnight wasn't given that much credence and that might point to a desire to embrace the bearish track. It is also possible that an overbought technical condition in the Nasdaq was partially responsible for some of the weakness in equity prices early this week. Unless the US claims data provides a fresh and distinctly up beat view toward the US recovery, we are not sure that the equity markets will throw off its corrective tilt today.

DOW:
The June Mini Dow comes into the Thursday morning action within striking distance of yesterdays low and seemingly favoring the downside tilt. It should also be noted that the June Mini Dow yesterday violated a 2 1/2 month old up trend channel support line at 1086.10. That up trend channel line leaves resistance above the market today at 1088.70. However, we see more downside action ahead, with the most logical downside target seen at 10,771.

A bearish signal was triggered on a crossover down in the daily stochastics. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The market's short-term trend is positive on the close above the 9-day moving average. The market setup is somewhat negative with the close under the 1st swing support. The next downside objective is now at 10733. The next area of resistance is around 10915 and 10974, while 1st support hits today at 10795 and below there at 10733.

S&P:
Like the Mini Dow, the June S&P failed at a 2 1/2 month old up trend channel support line at 1174.45 yesterday and that up trend channel line becomes close-in resistance today at the 1177.65 level. The next logical downside support level in the June S&P is seen at 1170.80. The market still doesn't seem to be in a position to embrace the positives and throw off a weak profit taking bias. Unless US claims, or US chain store sales figures jolt the bulls back into action early today, one should expect a further slow erosion in stock prices.

The daily stochastics gave a bearish indicator with a crossover down. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The market's short-term trend is positive on the close above the 9-day moving average. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next downside objective is now at 1166.13. The next area of resistance is around 1185.00 and 1192.12, while 1st support hits today at 1172.00 and below there at 1166.13.

NASDAQ:
For being the most overbought sector from a classic technical perspective, the Nasdaq has certainly held up relatively better than the rest of the market over the last 36 hours or trade. Perhaps the ability to hold together in the Nasdaq suggests that the overall market bias generally remains positive and that could mean this week's action is simple and normal technical balancing. In short, with a resurgence of severe Greek debt fears and or some fresh financial issue in the US, the June Nasdaq might not be able to hold above 1964.00 in the June Nasdaq.

Bonds:
Somewhat surprisingly Asian equity markets were down sharply overnight off ideas that the US was poised to hike interest rates, but that sentiment didn't seem to really knock Treasury prices back away from yesterday's highs. However, the market is seeing a minor setback in anticipation of a slack auction for the US 30 Year bonds later in the Thursday trade action. Surprisingly the trade is fearful of the $13 billion 30 Year auction today despite what seemed to be stellar interest in the 10 Year auction yesterday. With a very impressive bid to cover ratio and a lower yield than some might have expected, we would think that the bears would be a little leery of attacking Treasury prices ahead of today's auctions results. The US market will be presented with initial and ongoing claims data, as well as more testimony from the former US Fed Chairman on the financial crisis. With estimates for today's initial and ongoing claims readings mostly predicting minimal changes, the trade might not be able to garner that much direction from the scheduled data front. However, late today the trade will be presented with a Foreign Central Bank holdings report and that report could offer up a surprise for the Thursday night and Friday morning trade. We expected some fleeting interest for the long side this week, but it appears that the bull camp might be allowed to extend that weak control through another trading session, as global equity markets are softer and there are some fresh concerns toward the Greece debt situation providing a minor layer of flight to quality buying interest in US Treasuries. In the end, seeing Treasuries hold near yesterday's highs in the face of international equity market fears of a US discount rate hike suggests that the market is inclined to spin most factors into a positive tilt. Therefore, the June bonds look to have the potential to reach up to the 116-00 level, with June Notes potentially capable of re-testing the 116-05 level. While we would be concerned about pressing the market prior to the 30 Year auction result announcement, we would not be shy of attacking the market after the auction results are known, especially if the bid to cover is anemic, or the yield was a touch higher than the when issued rate. While the market didn't give the overnight economic news that much credence, it should be noted that UK February Manufacturing output rose by 1.4% and that UK Halifax Home prices were also 1.1% higher and therefore global macro economic news was slightly up beat overnight but that didn't seem to have any tempering influence on global equity prices. In short, sentiment favors the bull camp at least into the mid day auction results today.

Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The market's close above the 9-day moving average suggests the short-term trend remains positive. Since the close was above the 2nd swing resistance number, the market's posture is bullish and could see more upside follow-through early in the session. The next downside target is 113-280. The next area of resistance is around 116-110 and 116-270, while 1st support hits today at 114-280 and below there at 113-280.

US Dollar:
The Dollar has continued yesterday's rally against the European currencies as US conditions have taken a backseat to events overseas. Now that sovereign debt problems in Europe are once again becoming a main focus for the currency markets, any effect from Fed officials talking down chances for near-term US interest rate increases will be blunted. While conditions have not yet reached the crisis levels of last month, there is concern now that we could see this sort of situation flare up not only in Greece but in other EU countries as well. This factor will likely keep flight-to-quality support for the Dollar going through the rest of this week. With only weekly Jobless Claims as the main economic number for the US today, the trade might continue to look for headlines from across the Atlantic as the major source of direction of the Dollar. Unless something surprising surfaces the path of least resistance in the Dollar looks to remain up, with a possible near term target of 82.35.

EURO:
The June Euro remains headed toward a test of last months lows for the move, as it has been pressured by the continuing problems with EU sovereign debt that have apparently surfaced because of a tinkering of terms by the Greeks. In spite of having an aid package in place, the spread between Greek and German 10-year debt has now reached record wide levels again, indicating that the market is still very fearful of potential problems there and that in turn has pushed up borrowing costs enough to rekindle solvency concerns. Adding to the June Euro's difficulties, Euro Zone Retail Sales numbers came in weaker than expected this morning and with the ECB largely expected to leave rates unchanged, there doesn't appear to be a reason to take ones foot off the neck of the Euro. Look for a further erosion of June Euro prices, with the currency moving towards last month's lows near the 132.66 level. At this point, we aren't even sure if outstanding US economic news this morning would even serve to alter bearish sentiment toward the Euro.

Gold:
Apparently the gold market wasn't that interested in the news of another decline in South African gold and non gold metal production for the month of February. With February year over year gold production dropping by more than 9% in the latest monthly figures, one might have expected gold prices to have garnered some support but instead the gold market this morning seems to be focused on the demand side of the equation. The market also didn't seem to be that concerned about potential gold production setbacks in Kyrgyzstan that could result from a political power shift. Some players suggest that gold was simply overdone at the highs yesterday and with a slight resumption of Greece concerns and a higher US Dollar today, it is possible that a number of longs have decided to bank profits. The bear camp wants to suggest that rising Greek credit costs are set to revive the upside tilt in the Dollar, while the bull camp in gold is pulling for something favorable from either the US claims data or from the private US chain store sales figures.

Silver:
Typically silver might have been able to garner some spillover support from news of declining South African gold production overnight but as in the gold market, the silver trade doesn't appear to be that interested in classic supply side developments. Furthermore, silver exchange stocks for April 6th were 116.343 million ounces, down 107,168 ounces, but again the silver market doesn't seem to be capable of benefiting from minimal supply side issues. With the silver market recently paying a lot of attention to physical demand issues and the market also seemingly tracking both copper and platinum prices, it is possible that part of the early weakness in silver prices this morning, is mostly the result of outside market action. Traders are also suggesting that weaker equities and a higher US Dollar are serving to initially pressure silver prices.

Crude Oil:
May crude oil has come into this morning on the defensive again, extending its sell off from late in yesterday's session. This week's storage numbers seem to have removed some of the market's recent strength, as they indicate fairly high ongoing levels for crude oil stocks, as well as for crude oil imports. A stronger Dollar off of fresh EU debt problems, along lingering weakness in the US stock market have added to the pressure on prices energy prices this morning. Even so, the market still remains within $2.20 of 18-month highs. While prices look to soften off overdone technical considerations and a minor let down in global macro economic optimism, one should not forget the story from yesterday that 12 of the largest Chinese refineries would be running at a record rate of over 2.9 million barrels per day during the month of April, as that clearly points to the prospect of strong demand from that nation. Given the slacken economic views, seeing EIA crude stocks rise by 1.976 million barrels yesterday was seen as a reason to bank profits. However, with crude oil stocks sitting 9.835 million barrels below year ago levels, that would seem to provide some form of eventual underpin for prices. On the other hand, crude stocks do stand 20.725 million barrels above the five year average and that probably serves to embolden the bear camp. Crude oil imports for the week stood at 9.561 million barrels per day compared to 9.060 million barrels the previous week and that is another minor negative for the market to digest. Furthermore the US refinery operating rate was 84.49% up 1.89% from last week compared to 81.84% last year and the five year average of 85.97%. While the market might see increased refinery activity as supportive to crude oil prices, that could lessen the odds of a big tightening of product stocks ahead. In short, the bear camp has control today from a fundamental and technical perspective, as well as from an outside market perspective. Near term corrective targeting in June Crude oil is now seen at $85.00.

Natural Gas:
June natural gas remains mostly under pressure as we approach the Thursday US opening, but the market was able to respect the $4.00 level on the initial plunge lower. With all of the recent market turbulence created by the EIA's supply side calculation methods, it is likely that today's storage numbers will likely have the most effect on near-term direction. Unseasonably warm weather on the East coast has also put the market under pressure. With the Dollar higher, equities weaker and the regular petroleum complex under noted pressure today we don't hold out much hope of natural gas avoiding additional losses. We can't argue against a return to the March lows, but that type of move will probably prompt us to suggest a long term bullish option play.