Today's Market Guidance

Financial Overview:
Global markets are off balance because of the inability to get the Greece situation out of the headlines. With Goldman scheduled for a public beating from Congressional testimony today, investors are destined to feel bad about overall prospects. With several kinks in EU member countries promising to delay the authorization for the Greek aid package, that negative situation isn't about to go away. With a number of analysts predicting that Greece is just the tip of the debt iceberg problem in Europe, there is certainly a negative bias operating in the current market. We even suspect that favorable scheduled US economic data will be discounted today, as the markets instead look for blood in the Goldman testimony. In fact, we suspect that the Goldman situation will remain front and center until the Financial Reform push has been completed. In conclusion, the path of least resistance looks to be pointing downward today, with the first distinctly favorable development not expected until early afternoon on Wednesday, when the Fed releases its FOMC statement.

Dow:
The June Mini Dow remains slightly off balance into the opening today, as the negatives seem to be out weighing the positives. We see the potential for a near term decline back to the middle of the up trend channel line down at 11,100 and perhaps even the potential to fall to the bottom of the up trend channel support line down at 11,015, with that support channel rising to only 11,033 on Wednesday. In short, the bear camp has the current edge and we doubt that favorable scheduled numbers or favorable earnings reports are capable of shifting this market out of a weak profit taking bias.

The market rallied to a new contract high. Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside objective is at 11237. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 11190 and 11237, while 1st support hits today at 11112 and below there at 11081.

S&P:
The bias is clearly pointing lower today, with the key reversal on the charts from yesterday given added credence because of ongoing Greek debt concerns. In fact, we have to think that Congress is planning an all out attack on Goldman today and that is likely to injure investor and consumer sentiment in the process. With a long list of experts predicting even more debt problems out of the Euro zone ahead, favorable economic readings and the promise of lingering low US rates is going to be lost in the shuffle. We see a move to the middle of the up trend channel down at 1201.20 as an easy target today, with the bottom of the up trend channel of 1194.60 likely in the coming trading sessions.

A new contract high was made on the rally. 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 down puts the market on the defensive. The market's close below the pivot swing number is a mildly negative setup. The near-term upside objective is at 1219.43. The next area of resistance is around 1212.87 and 1219.43, while 1st support hits today at 1203.63 and below there at 1200.94.

Nasdaq:
With the middle of the up trend channel in the June Nasdaq seen at 2037.15, we can't rule out some additional downside action ahead. In fact, given the propensity to discount favorable earnings and the prospect for positive scheduled data points, we suspect that the June Nasdaq might be poised to slide toward the bottom of the up trend channel support line of 2009.10. The up trend channel support line does rise to 2013 on Wednesday and perhaps by then, the market will be able to find support off buying ahead of the FOMC statement release. At least in the short term, the market might even turn a deaf ear toward favorable tech sector news.

Bonds:
The Greece crisis lives on and that means flight to quality interest in US Treasuries will remain in place. In the prior trading session the Treasury bulls weathered higher equities and a significant jump in the Dallas Fed readings and still managed to remain positive. With both Bernanke and Geithner recently making comments about the economy remaining slack and US rates remaining low, we suspect that the Treasury market is also getting a bid from those who doubt the strength of the US recovery. With the Germany pushing for more tax increases and spending cuts for Greece, and the Bank of Greece overnight calling for a multi year approach to the budgetary reductions and increased taxes, there would appear to be a bit of a debate possible on the final package of aid and a delay in the negotiations would simply play into the Treasury bull's hands. While the TIPS auction seemed to go off well according to auction stats, the markets reaction was a decline yesterday in the wake of the results and that might turn up the pressure a bit on the market in the wake of the 2 Year note auction later today. In addition to Consumer Confidence, the market will also see a series of regional Fed readings and a Case-Shiller Home price survey and that means the market will be faced with an avalanche of second and third tier economic readings. With $44 billion in 2 year Notes to be auctioned at mid session today, we suspect that part of the lift from the Greece situation will be mitigated, but it could take a really shockingly bad result to fully remove the bulls from control. In fact, with heated testimony expected today on Capitol Hill regarding Goldman, we would expect the bull camp to even pick up an additional measure of buying support off the wrangling in Washington. With the Fed expected to maintain its view on rates and inflation recently found to be diminished, the market is likely to be lifted in the wake of the FOMC statement on Wednesday afternoon. Therefore, the overall tilt in Treasury prices looks to remain up over the coming two sessions, with the scheduled data and auction results at best, only offering up a temporary pause in the weak bullish tilt. In fact, even if the numbers this morning depict growth, we suspect that the market will not react to the data because of bigger issues ahead and because of the need to see the auction results at mid session before making a big move. Short term traders can probably buy 3 to 5 tick breaks off the data, or a 1/2 point break off the auction results, as it would appear that the Greek situation, the FOMC statement or residual concern for the US economy in the wake of the attempt to kill Goldman, should leave the bias in Treasury prices pointing upward. In fact, we see up trend channel support in the June Bonds today at 116-26, but that support level rises to 116-31 on Wednesday. In June Notes, solid support is pegged at 116-19, with that support level rising to 116-27 on Wednesday. Since there doesn't appear to be a way to quickly signal an all clear on the Euro debt issue, there doesn't look to be threat of a sustained downside moves in Treasury prices anytime soon.

The daily stochastics have crossed over down which is a bearish indication. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. The next downside objective is now at 116-080. The next area of resistance is around 117-100 and 117-250, while 1st support hits today at 116-180 and below there at 116-080.

US Dollar:
The Dollar looks to have regained some of its strength overnight as problems in Europe continue to over shadow the market. As negotiations continue in Athens, it appears that other nations in the EU are beginning to show the same credit difficulties that were the first signal that Greece debt would be a major problem. While the chance for full-out contagion is small, the lack of any resolution to this problem in the near term will remain an underlying support for the Dollar. While the market will see a series of secondary economic readings today from the US we doubt that the scheduled data is going to be given that much attention in the grand scheme of things. In fact, with a long list of analysts predicting other problems within the Euro zone and the US adding to the turmoil with a public roasting of Goldman today, the potential for more flight to quality buying off the Dollar is high. In fact, we see a near term rise back above 82.00 in the coming trading sessions.

Euro:
The June Euro continues to find it difficult to expand on Friday's reversal, as new problems seem to undercut any potential for a move higher. While an upcoming regional election is provoking German politicians towards adding more punitive austerity measures to the EU/IMF aid package to Greece, the Greeks themselves are looking to a multi-year approach to spreading out 'the pain' and that suggests a more pro tracked push and pull environment. The doubts whether this can be all tied up by mid-May, when Greece has to roll some longer-term debt, are beginning to weigh on the June Euro again as the resignation of the Belgium government yesterday, makes the passage of an aid package by all EU nations all the more difficult. As long as the news from Europe continues to be bleak, look for the June Euro to continue to head back towards the 1.32 level this morning.

Yen:
The June Yen has been a beneficiary of Euro weakness, as risk aversion from the problems in Europe looks to have thwarted a move towards its recent lows. Any strength show by the June Yen clearly runs counter to what Japanese officials are looking for, so any upside potential may be limited to a quick run towards 107.00. While a move lower only seems a matter of time, the June Yen should stay well supported as long as European problems continue to generate most of the market's headlines.

Gold:
With international equity markets a little soft this morning, the Euro under ongoing pressure and issues in the number of EU member countries making it unlikely that a vote on Greek debt assistance can take place quickly, it would seem like the Greek debt issue is destined to remain in the headlines for a while longer. With the Fed Chairman and the US Treasury Secretary recently hinting at the need to leave interest rates low, that would normally be supportive of gold prices, but gold and other physical commodity markets seem to be weak this morning because of classic slowing fears and some flight to quality migration. However, the gold market remains divided on the actual influence of the Greek situation on gold prices, with some thinking that further and more serious problems from the Euro zone will support gold prices, and others thinking that another break down in the Euro debt situation will serve to sink gold prices. With the market seeing an increase in gold production from Barrick Africa for the 1st quarter overnight that might be seen as a negative by some traders, but recently supply issues have played second fiddle to demand issues. The trade continues to float ideas that Indian gold demand is going to be strong due to favorable rainy season weather, but that story has been seen on several prior occasions and it could be offset by concerns of falling demand in the face of another European debt meltdown. Comex Gold Stocks were 10.158 million ounces up 6,336 ounces.

Silver:
In the early action today, the silver market is facing weakness in most industrial and precious metals markets. One might have expected silver to have soared off the very impressive Dallas Fed output readings yesterday, but instead fears of renewed trouble from the EU debt crisis seems to have stepped into dominate market action again. With the added pressure of weak energy prices this morning, it would seem like the positive industrial metals market track for silver seen in the prior trading session has been lost in the early Tuesday morning action. As suggested in the gold market coverage this morning, the silver market will see a flurry of scheduled US economic data points this morning, but that news is likely to be viewed as insignificant in the face of a geopolitical news focus. Some silver bulls might expect the upcoming FOMC statement to provide support to silver prices, but that news is still over 36 hours off in the future. Comex Silver Stocks were 115.468 million ounces up 135,231 ounces.

Crude Oil:
Ongoing problems in Europe are beginning to weigh on crude oil prices and a host of physical commodity markets. When one adds in a rekindling of position limit talk, the prospect of a public flogging of Goldman and a consistently negative currency market impact on energy prices, we have to give the bear camp a distinct edge today. With the market also seemingly whipping up talk of large US oil inventories again it would seem like internal and external factors are set to favor the bear camp. When one acknowledges the overbought spec long positioning in the last COT positioning reports, even the technical condition rings in as a negative. In our view the market is facing either a negative or very negative track in prices. While OPEC official seemingly promised to add production/supply if crude oil prices reach $90 or $100 a barrel, the market just isn't in a position to embrace positive angles. Early estimates for this week's storage numbers are showing builds for crude and the products, with refinery utilization expected to have a slight decline and that is also bearish toward prices. Watch the Dollar and equities, as action in those markets could result in a downside move to $84.99 or perhaps even $84.00 in the coming two trading sessions.

Natural Gas:
While the natural gas market still appears to have made a major bottom action over the last two months, we suspect that the market is destined to fall victim to broad based selling and negative macro economic sentiment. At least for the time being, the natural gas market looks to almost totally forget the favorable Wall Street Journal coverage last Friday, regarding the relatively cheaper cost of converting coal plants to natural gas, versus the cost to add the next round of pollution control requirements. Given the mostly bearish fundamental view toward natural gas into the March lows, we have to think that the market is destined to see a slide in prices back below the critical $4.25 level in the June contract. In fact, if the big picture macro economic outlook deteriorates even further, one could quickly make a case for a June Natural gas slide back even deeper into the consolidation range bound by $4.23 and $4.00.

Cattle:
The market remains in a solid uptrend, and ideas that cash cattle can trade higher this week along with continued strong gains in beef price should help support the uptrend in the discounted June futures. Cash cattle traded $99 last week, and traders see $100 or more in the next few weeks as a strong possibility. The spring demand season is upon us, and good weekend weather during the next few months could spark a jump in retail demand for beef. Boxed beef cutout values were up $1.38 at mid-session yesterday and closed $1.21 higher at $170.17. This was up from $167.10 the prior week, and is the highest trade for beef since July 16th of 2008. Cattle managed to close higher on the session yesterday due to supportive news from the USDA from the Cattle-On-Feed report. The market opened higher, but saw a fairly significant break back to near unchanged for the session before seeing a late rally to move back near the highs. Fears of the market's overbought technical condition may have limited prices on the upside to hold inside of Friday's range. With the low placements news, August cattle saw a contract high and a new contract high close. The estimated cattle slaughter came in at 125,000 head yesterday. This was unchanged from last week but down from 126,000 a year ago at this time. Placements for the month of March came in at 2.7% above last year, which was near the low end of estimates with most traders looking for close to a 7% increase from last year. This means less cattle coming off of feedlots into the summer. March was the 5th month in a row in which cattle-on-feed were below the previous year's pace, and the on-feed supply for the month of March was only at a 6-year low. The COT report as of April 20th showed the market in an extreme overbought condition, with the non-commercial and the combined spec and fund net long positions posting new record highs. However, the buying trend of the fund traders is considered a short-term bullish force. There are still no deliveries against the April contract.