Today's Market Guidance

Financial Overview:
The stock market continues to get the benefit of the doubt as prices early today have technically remained in an upside breakout on the charts. While there would not appear to be any fresh major negatives from the Greek debt front, there are threats of a possible strike brewing in response to the upcoming Greek austerity program and that could eventually rekindle global uncertainty and undermine equities. It would also appear that the Pound has remained under pressure overnight and that could be another factor prompting anxiety in the marketplace. On the other hand, one could suggest that hotter than expected Euro zone inflation readings overnight actually offer up a positive tilt from the economic front, as that result might insinuate movement in that economy. However, some traders have suggested that the equity markets would still be negative on the year if it were not for extensive merger and acquisition activity and that highlights the lack of forward progress on the recovery. Given that the report slate is thin today, the trade will probably look to early weekly chain store sales figures for some guidance in the early going. It is possible that portions of the market will see some residual support from news yesterday afternoon, that Qualcomm was set to buyback $3 billion of its own shares. However, the prospect of fresh details from the financial reform effort in the US and a GM recall has certainly served to temper some of the initial bullishness in place from the prior trading session.

DOW:
The March Mini Dow comes into the session this morning right on the prior session's highs and seemingly capable of pushing prices higher. We do see moderately significant resistance at 10,434 (the February 10th high) in the March Mini Dow contract today but without a noted deterioration in sentiment off a fresh headline development, we have to leave the bulls with a slight edge. At the present time, we see somewhat solid support down at the 10,375 level and therefore one has to fall back to the present trend, which is generally pointing upward.


The major trend could be turning up with the close back above the 60-day moving average. 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 market's short-term trend is positive on the close above the 9-day moving average. The market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. The near-term upside target is at 10463. The next area of resistance is around 10444 and 10463, while 1st support hits today at 10366 and below there at 10306.
 
S&P:
Apparently news of a GM recall, downside follow through in the Pound and talk of an upcoming Greece strike as well as rumors that Friday's payrolls could be weaker due to poor weather in February is of little concern to the S&P. Therefore one has to leave the edge with the bull camp this morning, especially since there are not any scheduled data points this morning from the US to derail the upward bias. There are US auto sales figures due out around mid session and that might yield some profit taking incentive but only after prices have forged some follow through gains earlier in the trade.
 
The market now above the 60-day moving average suggests the longer-term trend has turned up. Rising stochastics at overbought levels warrant some caution for bulls. The market's short-term trend is positive on the close above the 9-day moving average. The market's close above the 2nd swing resistance number is a bullish indication. The near-term upside target is at 1123.43. The next area of resistance is around 1120.12 and 1123.43, while 1st support hits today at 1108.88 and below there at 1100.94.
 
NASDAQ:
As suggested already, the Nasdaq might be garnering some ongoing support from a large tech sector share buyback effort, that was announced yesterday afternoon. Therefore, initial resistance is seen at the even number 1850 level and then again up at 1857. Without a fresh negative headline this morning, we suspect that the March Nasdaq is poised to claw its way into a consolidation trade above the 1850 level.
 
US Dollar:
While the Dollar did manage another fresh new high for the move in the early going today, the Greenback wasn't able to hold that pulse up move. We suspect that a minor back and fill action will be seen as a narrow window of euphoria is seen this morning. Perhaps window of euphoria is too strong of a term for a temporary pause in the flow of patently negative headlines, but we do think that distinct flight to quality sentiment will be lacking temporarily for the US Dollar. In fact, it is possible that a rate hike from Australia overnight in effect takes away some of the recent US Dollar dominance. Up trend channel support in the March Dollar Index today is seen at 80.42 and then at 80.53 on Wednesday, when there is expected to see fresh news from the latest Greece austerity package. Other close in chart support levels are seen at 80.70 but given the early action today, we can't rule out a temporary probe of that level. No change in the Dollar trend seen, but some down side technical balancing is to be expected.
 
Gold:
Just to highlight the secondary role of classic fundamentals in the current gold trade, April gold would appear to be set to trade higher this morning despite overnight news that a feared South African gold mining strike was being suspended. Apparently Gold Fields either met the demands from the Unions, or some type of compromise was reached in the negotiations and that in turn would seem to suggest that this particular labor issue has been fully resolved. Fortunately for the bull camp, the gold market hasn't seen that much recent buying support off the fear of a setback in physical supply, but perhaps that stance was made possible by the presence of favorable Indian gold import news overnight. Clearly seeing Indian February gold imports jumping by almost 21 tons above the prior year's tally is supportive to gold prices, but support off that story is partially diluted because the gold market was already anticipating a big leap in the Indian import tally from discussions last week. Also potentially limiting the upward tilt in gold prices this morning is news that gold prices approaching the $1,125 level seemed to be have pulled some added scrap gold supply onto the Asia market and that in conjunction with recently slack Chinese economic data, would seem to mean that gold prices were being partially limited in the Asian regions. In looking forward, the gold trade will probably be very interested in the US Non farm payroll readings, especially since an Australian rate hike overnight could be seen as an element that serves to restrain global growth prospects and in turn that action might also tamp down inflationary potentials. However, news of a much sharper than expected Euro zone inflation reading overnight could actually be seen as a favorable economic reading, as higher prices aren't usually present in a contracting economy. All things considered, the bull camp seems to have an initial edge this morning, but that edge isn't particularly dominating or broad in scope.
 
Silver:
Like gold, the silver market doesn't seem to be particularly concerned about the flow of classically bearish supply side news items. However, seeing daily silver exchange stocks post a single day increase in excess of 1 million ounces probably isn't a major issue unless those type of daily changes become commonplace. In other potentially undermining supply side news for silver, a major Mexican silver producer indicated overnight that their 2010 silver production would probably match their 2009 silver output figures. However, silver like gold hasn't paid that much attention to the supply side of the equation lately, with demand seemingly dominating the ebb and flow of silver prices. At least in the early going today, the demand side of the equation would seem to be favoring the bull camp, as the Dollar is weaker, US equities are positive and there is some favorable price action being seen in the industrial metals sector in the early Tuesday trade.
 
Crude Oil:
Trading in April crude oil has been choppy and two sided in the early overnight action with oil prices getting a lift from firmer global equity markets but gains being limited by the early strength in the dollar. A lack of major economic reports today could turn oil trading more technically based and tied to the ebb and flow of major outside market influences. So far crude oil has only seen minor pressure from the early strength in the Dollar this morning tied to ongoing concerns over European sovereign debt problems and the political uncertainty in the UK. It also looks as if a stronger gasoline trade and firmer US equities have helped crude oil offset the currency action. Reports that Chile may need to import gasoline due to refinery earthquake damage, reports of refinery glitches in the US and some macro economic optimism tied to yesterday's report showing a stronger than expected gain in personal consumption seems to be providing a more optimistic fuel demand view this morning. Oil prices have also been underpinned by the firmer tone in US equities in the early going. With oil market trading becoming closely tied to the actions in the stock market, it won't be surprising to see April crude oil edge back towards $80 this session, especially if the Dollar starts to lose upside traction. So far oil markets have been able to shrug off a report that Russian oil production hit a new record last month. Oil markets may also be seeing some support from the UAE's oil minister saying that oil market's are well supplied and that oil prices at current levels are acceptable suggesting OPEC is likely to leave quotas unchanged at this month's meeting. Oil traders didn't seem to be troubled that the UAE oil minister sees lower demand for OPEC oil this year. But while April crude oil may have the capacity to track higher on a firmer equity market trade, we also suspect the upside will continue to be capped at yesterday's high. In fact, with most traders expecting to see more than a 1.2 million barrel rise in crude oil stocks and technical indicators for oil at overbought levels, we also suspect that a rally back to $80 will inspire fresh selling. The bulls seem to have the early edge but with the inventory report and key reading on US employment ahead, it won't be surprising to see April crude oil trade within yesterday's price range this session.
 
Natural Gas:
Natural gas has edged higher in the early overnight action with the market bouncing a bit following yesterday's sell off. With April natural gas falling nearly 98 cents since the February high and daily indicators falling to an oversold extreme, the market has become over due for a technical correction. Therefore, on a purely technical basis it won't be surprising to see April natural gas trade back into the $4.75 to $5.00 price range ahead of this week's storage report. But eventually we see the market taking out the December low at $4.595 since weak industrial fuel demand and signs that producers are raising production along with higher liquefied natural gas imports this year raise the odds for natural gas supplies build back to burdensome levels. Some forecasters have temperatures in key US heating regions turning milder in early March. There are growing concerns that once heating demand fades, the pace of the economic recovery may not be strong enough to prevent a sharp build up in natural gas supplies during the injecting season. Industrial fuel demand has been drastically cut by the recession and the lower than expected reading in the ISM-manufacturing index suggests fuel use could remain anemic. Without any major economic reports today, trading in natural gas may turn more technical. And if that's the case, we suspect a more significant temporary short covering bounce could be seen which would then setup the next selling opportunity in this market.