Today's Market Guidance

Financial Overview:
The S&P has already managed a fresh new high for the year this morning and has seemingly engineered that pulse up move on the back of news of a $40 billion Greek aid package. While the market will see the Alcoa earnings later today, we don't get the sense that the market is being driven higher because of favorable corporate earnings expectations. Nonetheless, we think that the market needs something positive from Alcoa and then from Intel on Tuesday to extend the pattern of strength, as these reports cover cyclical as well as tech sector conditions and after the rather stellar run up over the last 2 1/2 months, we get the sense that the market needs bullish news to justify and feed the up trend pattern. At least in the early action today, it would appear that sentiment is set to start the week on a positive track and given the gains in energy, metals and other physical commodity markets, it is possible that Natural resource stocks are going to help the overall market move to even higher levels early this week.

DOW:
Like the S&P, the Mini Dow has managed a fresh new high for the move this morning, but prices have seemingly given back a large portion of that pulse up ahead of the NYSE opening. The bias looks to be pointing upward today off an improvement in the EU debt situation and also because of hopes for an earnings lift later this week. Critical support in the June Mini Dow contract is seen at the prior close of 10,953, with up trend channel support today not seen until all the way down at 10,838. The Commitments of Traders Futures and Options report as of April 6th for Dow Jones Index $5 showed Non-Commercial traders were net long 25,762 contracts, an increase of 5,563 contracts. The Commercial traders were net short 28,660 contracts, an increase of -8,577 contracts. The Non-reportable traders were net long 2,897 contracts, an increase of 3,014 contracts which represents a change from a net short to net long position. Non-Commercial and Non-reportable combined traders held a net long position of 28,659 contracts, which means the market is only marginally overbought.

A new contract high was made on the rally. A bullish signal was given with an upside crossover of the daily stochastics. 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. Market positioning is positive with the close over the 1st swing resistance. The near-term upside target is at 11017. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 10997 and 11017, while 1st support hits today at 10917 and below there at 10856.

S&P:
The June S&P managed a big range up move this morning but the trade seems to have questioned that move by giving up a large portion of that move into the NYSE opening. In looking at the charts, the June S&P has mounted some fairly aggressive gains over prior two trading sessions and seeing the favorable EU debt developments should have given the market a bigger sustained lift. The Commitments of Traders Futures and Options report as of April 6th for S&P 500 Stock Index showed Non-Commercial traders were net short 8,531 contracts, a decrease of 855 contracts. The Commercial traders were net short 7,164 contracts, an increase of -6,689 contracts. The Non-reportable traders were net long 15,694 contracts, an increase of 5,833 contracts. Non-Commercial and Non-reportable combined traders held a net long position of only 7,163 contracts. While the COT positioning is probably understated due to the rally that was forged in the wake of the COT mark off early last week, the S&P would seem to have more classic technical buying capacity than either the Nasdaq or the Mini Dow. We would be bullish as long as the June S&P manages to hold above 1192.60 today.

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 close above the 9-day moving average suggests the short-term trend remains positive. With the close over the 1st swing resistance number, the market is in a moderately positive position. The near-term upside target is at 1200.25. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1197.50 and 1200.25, while 1st support hits today at 1187.50 and below there at 1180.25.

NASDAQ:
The June Nasdaq actually managed a gap up trade overnight but seemed to be unable to hold much of that gap up move. Given the significant 2 1/2 month rally in the Nasdaq, we would suggest that the Nasdaq needs something definitively positive from Intel earnings on Tuesday to give the market the capacity to extend on the upside. The middle of the up trend channel in the June Nasdaq is seen at 1981.50 today and we would remain bullish as long as the June Nasdaq manages to hold above 1992. The Commitments of Traders Futures and Options report as of April 6th for Nasdaq Mini showed Non-Commercial traders were net long 56,582 contracts, an increase of 838 contracts. The Commercial traders were net short 62,859 contracts, a decrease of 3,258 contracts. The Non-reportable traders were net long 6,276 contracts, a decrease of -4,097 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 62,858 contracts. As we suggested last week, the Nasdaq continues to hold the longest spec position of the Mini Dow, S&P and Nasdaq futures.

Bonds:
The Treasury market starts the new week trading slightly lower on the charts but facing outside market conditions that could result in a downside pulse in prices. With the Euro zone Greece debt situation seemingly moving toward some form of temporary resolution that in turn has created an up beat feeling which in turn has resulted in slightly higher equities, a lower US Dollar and a wave of physical commodity market buying. It will still take some form of improved US economic reading to definitively put Treasury prices under noted pressure. In fact, with only a US Federal Budget Deficit reading due out today, one shouldn't expect that much guidance on the pace of the US economy, but that reading could still add a bit of pressure to Treasury prices as the Budget deficit will more than likely point to even more supply ahead. With the US economic report slate this week starting out very slow, trading ranges might be slightly narrowed but perhaps the bias might be tilted downward. After the close today, the market will see Alcoa earnings, with Intel earnings due out on Tuesday and that could serve to turn up the pressure on bonds and notes. We will assume that the path of least resistance is pointing downward today and that a logical downside target in June bonds is 115-00, with a similar target seen down at 115-16 in June Notes. The Commitments of Traders Futures and Options report as of April 6th for U.S. Treasury Bonds showed Non-Commercial traders were net short 115,594 contracts, a decrease of 5,190 contracts. The Commercial traders were net long 151,667 contracts, an increase of 5,167 contracts. The Non-reportable traders were net short 36,074 contracts, an increase of -10,358 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 151,668 contracts. This represents an increase of 5,168 contracts in the net short position held by these traders. It should be noted that the Non-Commercial Net Short position in Bonds hit a new record level at 256,697 contracts. The Treasury 10 Year Notes showed that Non-Commercial and Non-reportable combined traders held a net short position of 344,794 contracts. This represents an increase of 50,182 contracts in the net short position held by these traders. Therefore, the Treasury market is trending toward an overbought condition, but that is to be expected in the midst of an overall entrenched down trend pattern. However, we doubt that the technical condition will do anything but slow the overall progress on the downside tilt. Traders should look to sell rallies of 1/2 to 3/4 of a point, looking for an eventual return to the December 2009 lows below 114-00 in both June bonds and June Notes.

Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above resistance. A positive signal for trend short-term was given on a close over the 9-bar moving average. The upside closing price reversal on the daily chart is somewhat bullish. The close over the pivot swing is a somewhat positive setup. The next upside objective is 116-110. The next area of resistance is around 116-030 and 116-110, while 1st support hits today at 115-120 and below there at 114-280.

US Dollar:
After some heavy initial pressure overnight versus the Euro, the Dollar has found some support as the reality of the Greece situation has taken some downside momentum out of the market. While having concrete details about a potential $40 billion EU/IMF aid package provided European currencies with a measure of support this morning and that in turn undermined the Dollar, it is important to remember that Greece still has to ask for this aid first, something that they have not done yet. The market may have to wait until Greece tries to sell some debt in the market this week before we see whether the aid package will be implemented. With little in the way of economic input from this side of the Atlantic, before the Treasury Budget announcement late in the session today, we may continue to see the focus of today's trading remain on European issues. While well below its recent range, look for the Dollar to remain toward the upper end of today's early trading range and possibly head back towards the chart gap area that was left just above the 80.85 level. A number of markets seem to have had a major knee jerk reaction to the EU Package news and have failed to sustain their initial reactions and that might suggest that all markets have indeed over reacted. Therefore we suspect that the June Dollar index will manage to hold above close-in support of 80.52 today. The Commitments of Traders Futures and Options report as of April 6th for US Dollar showed Non-Commercial traders were net long 30,248 contracts, a decrease of 5,040 contracts. The Commercial traders were net short 33,306 contracts, a decrease of 6,158 contracts. The Nonreportable traders were net long 3,058 contracts, a decrease of 1,117 contracts. Non-Commercial and Nonreportable combined traders held a net long position of 33,306 contracts. This represents a decrease of 6,157 contracts in the net long position held by these traders.

EURO:
The June Euro started out overnight trading above its trading range for the past few weeks, but it has been unable to build upon that sharp rally as the market appears to be somewhat skeptical of whether the EU aid package will live up to the initial hype. Although Greece is saying that they have not yet asked for this aid, it is clear that a 200 basis point benefit from where Greece debt currently trades and what the EU/IMF package will charge in interest almost compels them to go with the aid. Also, there are some strong doubts that this 16-nation consensus will hold, if other EU nations come forward asking for help, or if possible Greece repayment problems escalate into a test of the EU's 'no-bailout' clauses. The timing of these announcements over the weekend had no small part in the market's severe reaction to this aid package, and has likely helped the June Euro put in a near-term high. While remaining well supported, it is more likely that the June Euro will move back towards Friday's highs around the 1.35 level than make a test of the overnight highs near 1.37. The Commitments of Traders Futures and Options report as of April 6th for Euro showed Non-Commercial traders were net short 64,017 contracts, a decrease of 19,183 contracts. The Commercial traders were net long 73,813 contracts, a decrease of -22,152 contracts. The Non-reportable traders were net short 9,796 contracts, a decrease of 2,969 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 73,813 contracts. This represents a decrease of 22,152 contracts in the net short position held by these traders.

Gold:
At least in the early Monday trade June gold managed to forge another new high for the move but the trade was initially unable to hold all of those early gains. The gold market continues to benefit from an improved macro economic outlook, as well as from a further reduction in Greece debt fears. It also seems as if gold is benefiting from improved investment interest. The Commitments of Traders Futures and Options report as of April 6th for Gold showed Non-Commercial traders were net long 223,852 contracts, an increase of 37,068 contracts. The Commercial traders were net short 267,848 contracts, an increase of -44,965 contracts. The Non-reportable traders were net long 43,996 contracts, an increase of 7,898 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 267,848 contracts. This represents an increase of 44,966 contracts in the net long position held by these traders. Exchange gold Stocks for April 8th were 10.056 million ounces up 4,413 ounces. Gold stocks have reached another new record high level but that has become an entrenched pattern recently.

Silver:
The May silver market has managed another new high for the move in the early going today but the bear camp might point to the fact that the market was unable to hold above the even number $18.50 level. The Commitments of Traders Futures and Options report as of April 6th for Silver showed Non-Commercial traders were net long 38,383 contracts, an increase of 4,658 contracts. The Commercial traders were net short 54,094 contracts, an increase of -5,720 contracts. The Non-reportable traders were net long 15,711 contracts, an increase of 1,061 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 54,094 contracts. This represents an increase of 5,719 contracts in the net long position held by these traders. Exchange silver stocks for April 8th were 115.392 million ounces, down 59,864 ounces. It would appear that favorable outside market forces of a weaker Dollar, modestly higher equities and rising industrial commodity price action was favoring the silver bulls in the early Monday trade action.

Crude Oil:
June crude has been unable to benefit from the sharply weaker Dollar this morning and in fact the market has given away most of its initial overnight gains. News that Chinese crude oil imports rose sharply in March and are now just below record levels, continue to show how strong demand is from that nation but seeing the market unable to hold up in the face of that news this morning is patently disappointing to the bull camp. In addition, this weekend's EU/IMF aid package for Greece could be seen as a development that could bolster energy demand from Europe, as an easing of tensions there is certain to be constructive for overall growth. With the Commitments of Traders Futures and Options report as of April 6th for Crude Oil showing Non-Commercial traders were net long a new record level of 219,720 contracts, an increase of 14,983 contracts it is possible that the trade is fearful of an overdone technical condition. In fact, the Commercial traders were net short a new record level of 233,903 contracts, while the Non-Commercial and Non-reportable combined traders also held a new record 'net long' position of 233,904 contracts. However, the market may already have begun to focus on this week's storage numbers, as the recent trend of weekly crude stock builds has eaten away at the deficit from last year's levels. However, if the refinery operating rate stays up near the 85.0% level, expectations are that crude oil stocks will continue to lag under year ago levels and that in turn should provide some measure of support to crude oil prices. Apparently the market needs to correct, as the outside market forces and the overall macro economic view this morning could have provided a range up extension to new highs for the year, but instead the market sees an OPEC member this morning suggesting that there is no real shortage of oil and that could result in a temporary slide back below $85.00 in June Crude oil. On the other hand, it could take an actual close below the $85.00 level in June crude oil to fully shift the trend to the downside.

Natural Gas:
The natural gas market might be set to get some support from fresh unwinding of the long crude/short natural gas spread trade. While one could suggest that natural gas is seeing mostly supportive outside market forces this morning, the natural gas market hasn't been able to fully embrace internal or external bull items lately. However, there is talk about a much more active and perhaps early Tropical storm season in the Atlantic and that could foster some technical short covering buying in natural gas. In fact, with the Commitments of Traders Futures and Options report as of April 6th for Natural Gas showing the Non-Commercial and Non-reportable combined traders holding a net short position of 64,122 contracts, there is certainly the capacity to see a short covering reaction ahead.

Corn:
The corn market is focused on the dollar, US weather and China this morning, and this was enough to spark a short covering rally in corn overnight. Traders indicate that the break in the dollar was the key factor leading to overnight strength. Traders also note that the July contract has found support at or just above the 355 level for a week and a half, and this continued on Friday. Weather forecasts call for continued dry weather in most corn growing areas through mid week. The next rain system is expected to build in the northern Plains starting tomorrow and then push into the NW Corn Belt on Wednesday. This may bring light to moderate rains into Iowa by Wednesday, with light to moderate amounts in Iowa, Nebraska, Wisconsin, extreme northern Illinois and Michigan into Friday. This week should also bring warmer temperatures which are expected to speed the much-needed drying process in fields across most of the Corn Belt with the exception of the extreme northern Midwest and the NW Corn Belt. With regard to China, analysts are looking carefully at the price differential between the price of imported corn, and the much higher price of domestic Chinese corn. China's government is expected to start selling corn in the northeast where much of the nation's corn crop is grown in order to slow the rate of increases. Government sources indicate that they will sell 500,000 tonnes of corn per week starting as early as next week, possibly selling a total of 4 million tonnes overall. The government still has ample reserves, but these are concentrated in the north and buyers in the south want to start importing in order to maintain livestock production numbers and lower their cost of production. The USDA estimates that China held 53.17 million tons of corn as of September 30th. The USDA's current estimate of the 2009/10 Chinese corn crop is 155.00 million tonnes with many trade sources coming in below that level. There is also widespread acknowledgement that existing assessment methodologies are inadequate for China corn crop, due in large part to the country's huge number of very small farms. The USDA's supply and demand report on Friday pegged 2009/10 ending stocks for corn at 1.899 billion bushels compared with 1.799 billion last month and 1.673 billion last year. Traders had expected ending stocks to jump to near 1.92 billion. The USDA lowered feed usage by 100 million to 5.45 billion bushels. World ending stocks for 2009/10 came in at 144.2 million tonnes, up substantially from 140.15 million tonnes last month but still down from 147.50 the previous year. This was due to the increased supply in the US as well as a revision upward in Brazil's corn crop. The USDA pegged Brazil's crop at 53.5 million tonnes, up 2 1/2 million from last month. The Commitments of Traders report as of April 6th showed Non-Commercial traders were net long 8,732 contracts, a decrease of 23,301 contracts. The non-reportable traders were net short 151,005 contracts, a decrease of 3,822 contracts. Argentina corn exports in February totaled 743,531 tonnes from 91,018 last year. Mexico bought 144,780 tonnes of US corn on Friday.