Today's Market Guidance

Financial Overview:
The equity market has apparently fallen back in a corrective mode in what appears to be partially a technical balancing move but it might also be the result of mixed opinions on the pace of the recovery. The market was helped yesterday by favorable tech sector news and without a fresh supportive headline issue today, the market looks to start the US session slightly off balance. While the Greece situation remains mostly under control, the trade did see concerns from Greece that they would not be able to pay such high rates for upcoming debt and that leaves the debt crisis as a key market force. With the US economic report flow today restricted to second and third tier private survey readings, the market is potentially vulnerable to fresh political wrangling on the health care and financial reform fronts. In either case, the prospect of additional uncertainty from Washington is a negative to the market, but perhaps not a major negative today. However, initial weakness in Europe and some noted weakness in the financial sector would seem to leave the bears with a slight edge into the early US Tuesday trade.

DOW:
The March Mini Dow has started out the Tuesday session on a weaker bias and in the process has tested even number support on the charts at 10,500. With some weakness in financial issues overnight and the Greece Prime Minister visiting the US and complaining about excess speculation, it is possible that US financial shares will see ongoing selling pressure, which in turn should drag the rest of the market lower because of the lack of alternative news flow. Up trend channel support in the March Mini Dow today is seen at 10,389 today and that support rises up to 10,416 on Wednesday.

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 has a slightly positive tilt with the close over the swing pivot. The near-term upside target is at 10603. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 10580 and 10603, while 1st support hits today at 10534 and below there at 10510.

S&P:
The March S&P enters the trading session in a negative posture and like the Nasdaq, the market appears to lack solid close-in support because of the rather sharp compacted rally last Friday. Initial support is seen at 1132.50 and then again down at 1131.70. The S&P bulls have to hope that Cisco news at 10:00 cst. serves to provide a lift to the tech sector and that in turn manages to support the rest of the market. At least in the early action today, we have to give the edge to the bear camp, but it does not appear as if the bearish tilt will be accentuated by anxiety.

Momentum studies are trending higher but have entered overbought levels. The market's close above the 9-day moving average suggests the short-term trend remains positive. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside objective is at 1142.87. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1139.75 and 1142.87, while 1st support hits today at 1134.25 and below there at 1131.88.

NASDAQ:
Despite favorable forward views from Texas Instruments overnight, the Nasdaq is starting out on a slightly weaker footing today. In fact, TI was supposedly having trouble filing orders and that caused the shares of that company to fall in the overnight action. However, it is possible that a scheduled Cisco announcement at mid morning today could provide the market with a distinct lift, but it is also possible that the company's view of the importance of this offering is overly inflated. Unfortunately the March Nasdaq seems to have little in the way of close-in support on the charts because of the steep run up in prices last Friday. Therefore, very close-in support is seen at 1882, with additional support not seen until 1877.

Bonds:
Weakness in equities and some supportive dialogue from the Chinese overnight regarding their ownership of US Treasuries has given the Treasury market a minor lift in the overnight trade. Apparently Chinese officials have suggested that their ownership of US debt was market driven and not a politically driven decision and that provided the bonds and notes with a bit of a lift ahead of impending supply later today. With the markets fresh off a better than expected US Non farm payroll reading last Friday and the Greece situation seemingly still mostly under control, that leaves a slightly negative fundamental tilt in the market. However, the Treasury market does have some things going for it early today into the 3 Year note auction of $40 billion, as yields have risen slightly and that combines with the Chinese suggestion that investing in US Treasuries is part of a function of their trading in the currency markets. With equity prices showing some weakness and Greece officials indicating that they would not be able to survive under such high borrowing costs, that suggests that some residual flight to quality buying interest could be circulating. However, the US economic report slate remains extremely thin with second and third tier private reports taking center stage. With the yield curve steepening, it would also seem like the trade continues to anticipate a rise in rates later this year and that could mean that the shorter maturities will meet slightly better demand than longer maturities in the coming auctions. We also suspect that indirect bids will continue to be the primary supporting force in the auctions, as the invisible hand of the Fed insures a 'look' of steady demand for US supply. Apparently a major international bank released a report recently, that suggested the weather related loss of US jobs in February could have been as high as 1,000,000 jobs, which supposedly compares to a similar job loss off weather in the wake of a blizzard back in 1996. With the Fed also acknowledging the possible impact of weather on the numbers last Friday, it is possible that the market will assume a positive psychological track (a negative Treasury price tilt) toward the economy, especially when the scheduled report slate is empty and unable to provide a contrary opinion. However, Manpower released a survey this morning that was slightly negative toward future hiring trends in the US and that might give the bulls some early incentive today. However, a weaker equity market also looks provides initial support, but we suspect that the Chinese news overnight, regarding their economic use of Treasuries and the prospect of a strong indirect bid in the 3 Year note auction later today, will leave the bull camp with a minimal edge into and through the first leg of the auctions today. In fact, we suspect that the market will mostly respect the overnight lows of 116-09 in June bonds and at 116-26 in June Notes. However, the upside should be limited in bonds and notes as the trend looks to be poised to turn downward, but only after the recovery is given some fresh credence by favorable first tier US economic readings. We suspect that resistance today in the June Notes will be situated around the 117-25 level, with similar resistance in June bonds pegged at 117-17.

US Dollar:
The Dollar has merely managed to climb back above the mid point of the last months trading range in the overnight action. Apparently the Dollar is getting some lift from Chinese comments that suggested their interest in US Treasuries is a function of their trading in the currency markets. In fact, the Chinese suggested that their interest in US Treasuries is economically driven and not politically driven and that in turn provided support to the Dollar. Furthermore, it would also seem like the markets are anticipating a revaluation of the Chinese currency ahead and that might also be seen by some as a source of support for the Dollar, especially since the Euro largely remains out of favor. It would also seem like the trade remains concerned about UK debt levels and it goes without saying that the trade remains concerned about the Greece debt situation. In fact, with the Greek Prime Minister suggesting that Greece wouldn't be able to survive in the face of recent high borrowing costs, the Greek situation looks to provide ongoing support to the Dollar. The Greece Prime Minister is in Washington, where he will probably get support for his claims that the Greece debt crisis was caused by speculation and not by decades of runaway government spending. We don't see a major upside extension in the Dollar today, unless the equity market comes under noted pressure, but in order for the Dollar to remain firm, means that the Dollar bulls will manage to avoid significant undermines from Washington.

Gold:
Unfortunately for the bull camp, the gold market was partially undermined by Chinese Treasury market comments overnight and also because of ongoing hints from Chinese officials that gold might not be as important to the Chinese as was hoped by some in the gold trade. However, the market is accepting of ideas that China will eventually increase its gold holdings and that probably provides some form of eventual underpin for gold prices. On the other hand, the gold market is facing a weaker equity market, a higher US Dollar and mostly slack macro economic views today and that appears to have given the bear camp an early edge. With questions on the recovery, seemingly surfacing in the face of a thin US report slate it would appear that gold is behaving like a classic physical commodity market in a sluggish economic environment.

Silver:
While silver bulls will point to silver's recent capacity to out perform gold, the outside market action is certainly giving the bear camp in silver a lot of fodder. Clearly silver has been showing positive classic fundamentals from demand for silver coins to talk about improving industrial use, but that tilt is being countervailed by concerns on the pace of the global recovery. In fact, silver exchange stocks did manage another daily decline overnight and that joins a recent short lived pattern of declines in exchange stocks. In a fresh development, the silver trade overnight saw the end to a mining strike in Mexico, but since the silver market didn't appear to get much lift off that supply side threat when it initially surfaced, the downside impact of that news might be limited. Furthermore, the silver market recently has seemingly paid more attention to demand side issues, than to supply side issues. Like gold, the silver market might take a lot of direction from the US equity market today in the wake of a thin US scheduled report slate.

Crude Oil:
Crude oil prices have seen a sharp break in the early overnight action under pressure from bearish outside market influences, an overbought technical condition and concerns the market has gone up too far too fast ahead of its fundamentals. Crude oil pushed to an eight week high yesterday on lingering macro economic optimism tied to last week's employment news raising expectations for a recovery in oil demand. But the rally in April crude oil stalled out yesterday just under key resistance at $82.50, which hinted that the market's overbought condition was starting to have an impact. Daily technical indicators for April crude oil have risen to an overbought extreme following more than a $12 rally from the February low. The March 2nd COT report with options showed funds held a hefty net long position in crude oil which was likely approaching a record level since the oil market has rallied about $2.73 since the report was measured. With fresh economic news scarce in the beginning of this week and equities falling back after last week's gains has left the oil market at a high price level without a fresh buying incentive. Part of the selling in crude oil this morning also looks to be currency connected since a stronger Dollar seems to be inspiring investors to scale back risk at crude oil's expense. With a slump in equities souring the macro economic view, oil is also being pressured as market focus appears to have shifted back to the supply side. Forecasts for this week's inventory report to show a nearly 2 million barrel rise in oil stocks has also inspired traders to book profits since it would be the six straight weekly inventory increase and clearly show oil supplies remain ample and demand remains tepid at best. Some traders may also be booking profits in oil since the EIA in their short-term global supply/demand outlook released at 9:00 am central today is expected to leave their demand forecast unchanged and that may be disappointing to some traders. In the end, crude oil looks as if it has gotten a bit ahead of itself and although the market has show remarkable resiliency, it may take a bullish EIA inventory surprise or positive readings from the economic news released later in the week before the bull camp can reclaim control. In the mean time, given April crude oil's overbought condition, we can't rule out a break back to $79.06 (the market's 100 day moving average), if support at $80 fails to hold. But with oil following equities closely, the degree of profit taking in crude oil will likely be tied to the degree of downside traction seen in the equity markets.

Natural Gas:
Natural gas attempted to edge higher in the early overnight trade following yesterday's push to a new contract low. But we suspect the slide in crude oil and the bearish fundamental sentiment that has become entrenched in this market will make upside traction in natural gas difficult despite being technically oversold while leaving downside price risk in place. The spread between crude oil and natural gas in Btu terms had widened significantly recently and natural gas may be underpinned while a sharp break in crude oil helps to narrow in the spread. Daily indicators have fallen to oversold extremes and that suggest a technical bounce in natural gas could be seen at any time. But besides a technical bounce there is little else to prop up natural gas prices right now. The National Weather service is predicting natural gas heating demand to be 28.5% below normal this week and with private forecasters also predicting warmer temperature outlooks over the next two weeks, it is clear that winter heating demand for natural gas is quickly fading. Natural gas storage remains slightly above the 5 year average and with producers steadily raising the number of drilling rigs in operation, there is a high potential for natural gas storage to rebuild to burdensome levels during the injection season since industrial fuel demand still hasn't seen a significant recovery from the recession. As a result we eventually see April natural gas falling back to test the $4.15 to $4.00 price range.