Today's Market Guidance

Financial Overview:
While some sectors of the stock market managed to claw out fresh new highs early this morning, the market wasn't able to hold onto those gains into the US opening. Perhaps the markets were a little overdone on the optimistic track from the prior trading session and perhaps the markets are seeing renewed concerns from Greece, but the market is set to start the trade today in a partially corrective posture. In fact, the market did see a positive Chinese GDP reading, and therefore it is possible that the markets wanted to see something even more impressive from China. With inflation readings this week muted, some growth showing up in the US numbers and the US Fed Chairman once again promising to keep US rates low for an extended period of time, there should be a pretty solid bullish fundamental environment in place, but perhaps the market got a little ahead of itself yesterday. Furthermore, given the renewed concern toward Greece this morning and the overdone technical action yesterday we have to give the bear camp a minor edge early this morning, but it is possible that a positive sweep of US economic data will go a long way in tamping down today's initial selling interest.

Dow:
Technically the June Mini Dow wasn't able to claw out a fresh new high for the year in the overnight action and that has the bear camp hopeful this morning. However, the markets did see favorable Fedex earnings news overnight and the markets were also presented with a very robust Chinese GDP reading. Therefore, we don't see the need for anything other than a normal corrective balancing on the charts, unless of course the Press actually finds something definitively fresh and concerning on the Greece debt situation. Unfortunately for the bull camp, up trend channel support isn't seen until the 10,909 level today, with that support level only climbing up to 10,932 on Friday morning.

The market made a new contract high on the rally. The crossover up in the daily stochastics is a bullish signal. Momentum studies are trending higher but have entered overbought levels. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market's close above the 2nd swing resistance number is a bullish indication. The next upside objective is 11142. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 11115 and 11142, while 1st support hits today at 11019 and below there at 10949.

S&P:
With UPS, Fedex and CSX all posting stronger than expected earnings and the Fed apparently not set to tighten yet, one would think that the bull camp would be able to consistently maintain control over this market. However, the market does appear to be skeptical on the sustained growth argument, but that wall of worry type of thinking would seem to ultimately allow the up trend to continue. It is possible that 1201.70 will provide the June S&P with a solid support zone today, especially if the US numbers are positive as expected this morning.

The market made a new contract high on the rally. The crossover up in the daily stochastics is a bullish signal. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The close above the 9-day moving average is a positive short-term indicator for trend. There could be more upside follow through since the market closed above the 2nd swing resistance. The next upside objective is 1216.68. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1213.37 and 1216.68, while 1st support hits today at 1200.63 and below there at 1191.19.

NASDAQ:
Technically the June Nasdaq did manage to forge a new high for the year in the overnight action but the market has also given back a portion of those gains into the opening today. With a series of very favorable cyclical earnings reports released over the last 24 hours, we would expect this market to find support on the charts fairly quickly, especially if the scheduled US data this morning comes in as expected. We see initial support in the June Nasdaq at 2016.50 and then again down at 2010.00.

Bonds:
Initially higher Asian equity markets overnight gave way to slightly weaker early US equity market action and that in turn provided US Treasuries with a minor lift. The initial gains this morning might be a reaction to an overdone sell off in the prior session, but it is also possible that some shorts are doubtful of patently bearish US economic news later this morning and are covering their shorts. At least a portion of the slide in the second half of the trading session yesterday was the result of a generally up beat US Federal Reserve Beige book release. However, the Beige book impact was probably muted because of suggestions earlier in the trading session from the US Fed Chairman that US rates were still set to be low for an extended period of time. If the Fed found justification for raising the discount rate last month, then they would appear to have even more justification now for adjusting monetary policy in the weeks and months ahead. In fact, given the sharp decline in ongoing claims last week, the trade will probably give that reading a significant amount of attention later this morning. However, most estimates are calling for only a minimal decline in those figures today and given the on again, off again recovery personality of this post recession recovery, we are somewhat doubtful that the ongoing claims number today will see sequential improvement. However, the trade is expecting to see a modest improvement in both Industrial Production and Capacity Utilization readings. It should also be noted that the trade will be presented with what is expected to be another minor improvement in the New York Empire State Manufacturing Index and the trade is also expecting an up tick in the Philly Fed Manufacturing Index. Therefore, the market would appear to be facing a number of minimally bearish (positive) economic measures but yet June bonds to this morning's opening range have managed to hold 2 full points off the early April lows. As for June Notes they are not quite 2 full points above the early April lows and we are having trouble justifying the upward action this month. Certainly a number of markets started to question the progression of the recovery at the beginning of the month and the Treasury market was oversold, but given the evidence of recovery this week and the move to even more new highs in the US equity markets, that would seem to leave the bull camp without a solid case. Clearly seeing the Fed Chairman reiterate the need to leave rates low mantra is throwing a bone to the bull camp, but the real proof should ultimately come from the US numbers and therefore we would take a lot of direction from today's claims readings. The Fed's Fisher will give a speech this morning titled 'Taking Stock: Where do we stand in the crisis?' and we suspect he will have to admit that we are not only back from the brink, but that the economy is moving closer to self sustaining growth. However, the bull camp has been able to keep hope alive on the EU debt crisis again and also because both bonds and Notes were aggressively oversold in the two prior COT positioning reports, but now that the market has corrected significantly, we just don't see the technical or fundamental justification for moving even higher in the last four months consolidation zone. In the end, the main supporting element for Treasuries right now, is the idea that Spain or other EU members are possibly in need of capital. In fact, some players are even suggesting that capital could begin to flee Greece and that in turn could restart flight to quality buying of Bonds and Notes. In conclusion, the classic fundamental tilt is pointing downward off the economy but that issue isn't being given full attention today because of international fears. We can't rule out a return to this week's highs, but we don't see the fundamentals to fully extend the April bounce.

The close below the 60-day moving average is an indication the longer-term trend has turned down. Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The close under the 18-day moving average indicates the intermediate-term trend could be turning down. The market is in a bearish position with the close below the 2nd swing support number. The near-term upside objective is at 116-290. The next area of resistance is around 116-070 and 116-290, while 1st support hits today at 115-110 and below there at 115-040.

US Dollar:
The Dollar has regained its strength against European currencies overnight, benefiting from a re-emergence of EU sovereign debt problems, as well as some extremely strong Chinese economic data. With an 11.9% jump in first quarter Chinese GDP readings, it seems all but certain that China will have to make some interest rate hikes in the near future, and that has sparked concerns that the Chinese might over tighten and in turn trip up the global recovery. While the over tightening argument seems to be a 'reach' the markets might be looking for an excuse to favor the Dollar. In contrast, Europe continues to have issues in trying to put the Greece debt situation fully to bed as potential legal challenges in Germany may derail passage of the EU aid package. It seems unlikely now that this weekend's EU meetings in Madrid will achieve any sort of sustained solution to ongoing problems in that region, not only with Greece, but with several other nations as well and that turns up the buying interest toward the Dollar by another notch. While we have not reached the crisis levels of earlier in the month, the inability of Europe to get any sort of resolution to their problems may end up restarting a flight-to-quality move across the Atlantic. We simply doubt that favorable US economic data this morning will rekindle enough global confidence to tamp down the Euro fears. It is possible that the June Dollar might fill the gap left up at 81.00 early this month.

Euro:
While the potential German legal challenge to the EU aid package is only one among many upcoming hurdles to be dealt with, it seems to be the one that has fully derailed the June Euro's recent rally, as prices have already made a decisive move back down into the chart gap made over last weekend. In addition to a Greece situation that appears to have no easy conclusion on its horizon, news that Hungary is coming forward to renegotiate their EU/IMF aid package may be a sign that other nations in that region may be lining up for help. Unless there is a change in tone from Europe, we could well see another run at the lows from earlier in the month. For now, look for the chart gap down to the 1.35 area to be filled during today's trading and for the Euro to work toward the 1.3400 level.

Yen:
The June Yen has been able to stay relatively well supported this morning, as the sell off from European currencies has helped to lift the Yen up and away from its recent lows. As long as Europe holds the focus of the market today, the June Yen should see some minor benefit from cross-spreading. However, if the Yen manages to move back above the 108.00 level that could spark technical stop loss buying wave and an even sharper rally ahead.

Gold:
The gold market is showing some initial weakness into the early US Thursday trade and that isn't surprisingly considering a weaker London gold fix and early weakness in the Euro. It also seems as if gold and other commodity markets saw the robust Chinese growth readings and came away with fears the Chinese might over tighten. While the gold market was presented with evidence of rising gold production from Rio Tinto overnight, the gold market hasn't been that interested in supply side stories lately and also the amount of gold produced by Rio Tinto isn't a major factor relative to overall world gold supply. Surprisingly the gold trade didn't seem to benefit from news yesterday of very robust Indian gold imports and that could suggest that the gold trade instead remains focused on big picture macro economic issues like the EU debt problem. Some traders have suggested that flight to quality buying would be expected off renewed Greece concerns, but that reasoning doesn't seem to be working out this morning. The bull camp hopes that dovish US Fed comments and evidence of forward progress in the US recovery will provide some support, while the bear camp seems to be banking on another concerning chapter from Greece. Comex Gold Stocks for April 13th were 10.084 million ounces up 9,772 ounce.

Silver:
The silver market was unable to rise above the prior session's highs overnight but the bull camp might point out that the May silver contract has been able to hold above the prior session's lows in the early trade today. Like gold, the silver market was presented with news of rising physical production from a Russian silver producer, but recently the precious metals markets haven't given that much attention to rising physical supply news items. The bull camp in silver appeared to be disappointed with the action yesterday, as silver prices didn't seem to catch that much buying in the wake of a sharp US equity market rally and very impressive gains in energy prices. Some players suggested they were worried about the Chinese 1st quarter GDP reading yesterday, but that measure did come in with a favorable 11.9% gain and that in turn resulted in fears of over tightening by China! In short, a stronger Dollar, lower equity prices and lingering EU debt concerns appear to have initially trumped mostly positive US domestic macro economic news headlines over the last 24 hours. Comex Silver Stocks for April 13th were 115.447 million ounces down 367,866 ounces. Silver stocks have declined in 11 of the last 20 days.

Crude Oil:
While losing a little upward momentum from today's strength in the Dollar and renewed concerns from the Euro zone, energy prices generally continued to benefit from yesterday's strong EIA storage data and from the new highs in the US stock market yesterday. As the market heads toward what could be a busy summer driving season in the US, the news that EIA crude stocks fell for the first time in 11 weeks, added to the worldwide strength in energy prices that continues to flow from favorable demand expectations. However, last night's 11.9% gain in first quarter Chinese GDP should have prompted even more macro economic optimism, but instead portions of the trade is attempting to spin that development into a negative by suggesting that China might now be set to over tighten. While a potential revaluation of the Chinese Yuan could make them a more aggressive importer of crude oil, the market might be distracted away from favorable energy market fundamentals by either EU debt concerns, or a sharply rising US Dollar. Traders should look to the price reactions in the wake of the scheduled US data flows this morning for guidance. If oil prices fail to rally on positive US economic readings, that could be a sign that the bear camp has regained a slight toe hold. We still think the overall trend is pointing upward, but the bear camp is vulnerable to a back and fill action unless the Euro zone issue is effectively tamped down. With an OPEC member this morning suggesting they are happy with current oil prices, that can usually result in some form of price setback. Yesterday EIA crude stocks fell 2.202 barrels and are 13.037 million barrels below year ago levels. Also, crude stocks stand 18.575 million barrels above the five year average. Crude oil imports for the week stood at 8.88 million barrels per day compared to 9.561 million barrels the previous week. The refinery operating rate was 85.59% up, 1.10% from last week compared to 80.37% last year and the five year average of 86.04%. Average total product demand for the past four weeks was up 1.85% compared to last year.

Natural Gas:
June natural gas has held at levels well above this week's lows, but will need to contend with EIA storage data later this morning. While a build is almost certain for this time of the year, the market might take a large measure of direction from the rekindling of the EU debt crisis. However, there is also quite a large range for estimates for the expected build in storage this morning and that could lead to some post report volatility. Since natural gas was already having trouble joining the bull wave in physical commodities, we suspect that negative outside market forces will serve to cast a more negative light on gas prices today. In fact, we suspect that June natural gas prices are capable of a near term setback down to the middle of the March and April consolidation zone down at $4.16.

Corn:
The July corn contract traded down to near the 355 area on several occasions last week and traders said that the market kept failing to attract fresh selling at that level. After trading just above 355 to start the current week, a wave of buying took July corn higher on Tuesday and then sharply higher on Wednesday. This took the July contract to the highest levels since March 25th, although the market trimmed its gains by the end of the session. Traders indicate that good demand, light farmer selling and fund buying were the main factors behind the short covering rally. These positive price factors stand in contrast to the superb weather and soil moisture conditions across the Midwest in recent weeks and the fact that this may allow farmers to plant all of the corn acres currently anticipated by the market and possibly even add to current intentions near 88.798 million acres if the weather remains favorable. Scattered light to moderate showers are expected to move in from the NW Corn Belt through the end of the week, pushing into the central Midwest and then the mid south. This is not expected to bring serious delays in field work and generally dry conditions are expected to return this weekend and into the start of next week. South Korean customs data show that corn imports during the Jan-March period stood at 1.85 million tonnes, up 50% from last year. However, South Korea's largest feed maker passed yesterday on a tender for 110,000 tonnes while a processing industry association bought 55,000. The USDA will issue its latest Export Sales report this morning. Sales need to average 566,700 tonnes each week to reach the USDA's current export projection for the marketing year.

December corn may take time in a basing pattern as traders still see a 160 plus yield as normal. Support comes in at 386 3/4 and 383 3/4 with 393 3/4 as significant resistance. Watch for some consolidation trade over the near-term and some weakness today.

Cattle:
Traders seem to believe that the beef market and the cash market may have already put in a spring high, and along with the surge into the mid-March highs think that the market was overbought. However, demand typically picks up dramatically into the May-June time frame as the barbeque season picks up the pace of beef demand. The USDA predicts that 2nd quarter beef production will be about 300 million pounds above first quarter production. This is the 'smallest' increase for the quarter in ten years, and could help exaggerate the typical seasonal tendency for beef prices to rally into the spring. If production is to meet USDA projections, average weights will need to pick up to a more normal level and this may be a difficult task given the steep discount of June cattle to the cash market. The large discount encourages producers to move cattle as soon as possible, which could hold weights lower. In addition, imports are down and this could hold hamburger meat prices higher than normal into the spring as exports continue to improve. Beef exports in February were reported at 157.39 million pounds, which was up from 153.57 million on January and up 28.3% from last year. News of a break through in the trade dispute of US poultry to Russia could also help unclog the poultry pipeline. Broiler exports in February were reported at 460.1 million pounds, which was about the same as January and down 17.9% from last year. June cattle closed lower on the session for the third day in a row yesterday. Continued selling in the nearby contract off of ideas that the cash market put in a near-term top last week, along with a lower beef trade at mid-session, helped to pressure. Fund traders hold a massive net long position, and the selling momentum pushed June down to a new low for the month. There are still no deliveries against the April futures. The estimated cattle slaughter came in at 122,000 head yesterday, which was a little below expectations and could signal a slowdown in packer demand. This brings the total for the week so far to 373,000 head, up from 367,000 last week at this time and up from 362,000 a year ago. Boxed beef cutout values were down 28 cents at mid-session yesterday and closed 18 cents lower at $166.74. This is still up from $164.62 a week ago with the market coming off of the highest level since July 21st of 2008.