Tuesday, April 6, 2010
Rut Buy Back Fill
We just got another buy back. Apr 600/590 put spread was just closed for 0.05 Debit. Cancel all other orders for this spread. Updating tracker now. Here is what we have on right now. If our last put spread gets bought back we will look to open a new May spread.
Today's Market Guidance
Financial Overview:
The stock market is showing signs of correcting a shorter term overbought condition. It is also possible that the market is fearful of another interest rate hike threat, with the US FOMC meeting minutes scheduled for release later today. It is also likely that renewed tension in the Euro zone, off the terms of the Greek support plan is serving to push some global investors to the sidelines this morning. In short, the market seems to need a little back and fill on the charts and that could clear the way for a setback to up trend channel support lines. As suggested yesterday, the Nasdaq has been relatively more overbought than the S&P and that could mean the Nasdaq is destined to correct a little more aggressively today. However, there doesn't appear to be a large amount of anxiety in the marketplace today and that should reduce the magnitude of the correction. With the Australian central bank rate hike overnight and the Chinese indicating they might allow a wider trading band for their currency, that would seem to leave the prospect of up beat macro economic sentiment in play. In conclusion, we don't see an end to the uptrend pattern but the presence of the FOMC statement later today could offer enough of an excuse to knock prices back throughout the session today.
DOW:
The June Mini Dow enters the trading session today right on a two month old up trend channel support line of 10,880, with slightly lower support seen down at 10,860. We don't see the scope for an aggressive setback in prices today but the June Mini Dow has forged some fairly significant gains since March 31st and therefore we have to give the early edge to the bear camp this morning. On the other hand, this market has shown the ability to correct quietly and quickly. We would think that longs with stops just below 10,750 will be able to ride through the choppy to lower action today.
The rally brought the market to a new contract high. 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. A positive setup occurred with the close over the 1st swing resistance. The near-term upside target is at 10970. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 10951 and 10970, while 1st support hits today at 10889 and below there at 10847.
S&P:
The S&P has forged some moderate gains over the last 5 or 6 trading sessions and therefore it is short term overbought. However, with the last COT positioning report showing the Non Commercial and Non Reportable combined position to be holding a minimal spec long position, we don't expect to see an aggressive corrective slide in prices directly ahead. Near term support and a possible target into the early afternoon trade today is 1175.00.
The market made a new contract high on the rally. 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. The market's close above the 2nd swing resistance number is a bullish indication. The next upside objective is 1190.68. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1188.37 and 1190.68, while 1st support hits today at 1179.13 and below there at 1172.19.
Bonds:
The Treasury market saw another downside breakout yesterday in the face of another set of better than expected US numbers, but the trade was also under pressure because of whispers of a possible discount rate hike ahead. Some suggested that lackluster interest in the TIPS supply added to the downside yesterday, but the June bonds were already within 3 ticks of the ultimate lows before the TIPS results were known. In looking forward, the market seemed to reach a fairly excessive oversold condition around the lows Monday and with a small measure of renewed flight to quality concern on the Greek debt bailout terms, it is possible that Bonds and Notes might catch a weak bid off geopolitical developments. We also suspect that higher yields might work in the favor of the upcoming auction flows, especially if Euro uncertainty remains in the headlines and equities are trading a touch lower. However, with a Chicago Midwest Manufacturing report due out an hour before the 3 Year note auction results and some expectations calling for an up tick in that report, the short covering window this morning might be rather narrow. With the Bank of Australia raising interest rates overnight and suggesting more hikes might be on the way that in turn facilitates and fosters concern that the US is set to follow that same path. Therefore, traders might be lucky to see short covering rallies in excess of 3/4 point in either bonds or notes directly ahead. In fact, if there is going to be a rally today, we would expect to see that early in the trading session today, as the trade attempts to play up the flight to quality situation in Europe and some in the trade attempt to talk up the potential demand for the 3 Year notes. In the end, we fear the results of the auction, as the trend for the US instruments seems to have turned down recently and the US numbers certainly seem to discourage aggressive participation. Therefore, we wouldn't be surprised to see the June bonds attempt to return to the 115-03 level, with June Notes possible managing to return to the 115-20 level prior to mid session today. We would suggest that aggressive traders wait for a rally into and through the US number flow and then look to get short again in the face of the auction results at 12:00. In the end, the down trend should remain in place even if the market shows signs of correcting or balancing its oversold technical condition this morning. With the FOMC meeting minutes scheduled for release later today, one should expect to see something hawkish from the Fed or perhaps more dissention in the ranks regarding when the central bank will move to raise historically low interest rates.
Momentum studies are declining, but have fallen to oversold levels. The close below the 9-day moving average is a negative short-term indicator for trend. The market's close below the pivot swing number is a mildly negative setup. The next downside target is 113-200. With a reading under 30, the 9-day RSI is approaching oversold levels. The next area of resistance is around 114-280 and 115-150, while 1st support hits today at 113-310 and below there at 113-200.
US Dollar:
As the markets fully return from the holidays, it would appear that strength in the Dollar against European currencies has also returned today, as sovereign debt problems have been returned back to the market's forefront. While generally stronger, the Dollar has lost some ground against the Yen as that currency is also receiving a boost from the feared problems in Europe, as the Yen's severe sell off over the past few weeks might have made it a 'bargain' destination for some near-term flight to quality money. However, recent strength in US economic numbers has made US interest rate hikes more of a probability than a possibility, with only timing the main question now and that is lending support to the Dollar. With a host of softer economic numbers from the Euro zone overnight, the presence of renewed flight to quality concerns and the prospect of another positive US economic reading later this morning, one has to leave the Dollar with the edge. In fact, in the face of somewhat hawkish Fed meeting minutes release we wouldn't be surprised to see the June Dollar index manage a rise back to the 81.70 first resistance zone on the charts.
EURO:
Last week's recovery rally in the June Euro appears to have been fully derailed by news out of Greece this morning, with the market already headed back in the direction of old lows. It appears now that Athens is looking to renegotiate their recent deal with the EU, trying to eliminate the participation of the IMF as well as coming directly to the US to sell 'Yankee' Greek debt. While last month's problems were never fully extinguished, it is surprising that they would reappear in such short time. Although the funds leaving Greek banks today may not leave the EU entirely, it's a good guess that some of them will be taking a flight across the Atlantic toward the US. In addition, a rise in Spanish unemployment and lower German car registrations puts the contrast in economic prospects on either side of the Atlantic into a clearer focus. As long as there is such a contrast in near-term economic prospects and interest rate differential conditions, look for the June Euro to be on the defensive versus the Dollar. Near term downside targeting in the June Euro is at least 1.3312 and possibly down at 1.3291.
Gold:
Despite seeing news overnight of the prospect of rising seasonal demand in India, the gold market came into the US Tuesday trade under moderate pressure. Clearly a rising Dollar was serving to undermine the gold trade but some traders suggested that the weakness this morning was the result of renewed concerns that the Greek debt situation was going to slow or derail the recovery effort in the Euro zone. Typically the gold market is undermined in the wake of rate hike news and with the Aussie's hiking rates last night and seemingly threatening even more hikes in the future, that might have served to dampen sentiment toward gold prices. Apparently the gold market isn't that interested in the prospect of reduced South African gold production off striking miners and that suggests that the focus of the gold market is on demand instead of supply side issues.
Silver:
The silver market is seeing some initial corrective action this morning in the face of a higher Dollar, weaker global equity prices and also because of a series of slack Euro zone economic readings. The silver market has recently shown some divergence with the gold market, with silver seemingly less reliant on the minor ebbs and flows in the US Dollar. One might have expected silver to have garnered some support from news of a South African gold mining strike overnight but recently silver and gold haven't been locked on to classic supply side developments. Some traders expressed concern over the inability to sustain May silver prices above $18.00, while others were emboldened by the May silver contract's ability to hold above the prior session's low in the early Tuesday morning trade. However, with copper and platinum prices lower early and energy prices waffling around both sides of unchanged, the outside market action would seem to be favoring the bear camp in the early going today.
Crude Oil:
While May crude gave back some of its gains overnight, it remains way above its recent trading range as the sharp rally over the past week has held prices near 17-month highs. Today's strength in the Dollar may have taken some of the steam out of the market, but news of supply constrictions like the Tesoro refinery explosion and from the hijacked super-tanker yesterday continue to underpin the recent move higher. Although relatively strong US economic numbers will continue to support energy prices, the market has already begun to focus in on this week's storage numbers and that is also serving to limit the upside. Early expectations are that the recent trend of crude oil stock builds and product stock draws are likely to continue and since gasoline stocks are still flush, the market probably won't be able to spin the stocks situation into a positive just yet. However, in looking at crude oil prices waffling around both sides of unchanged this morning, in the face of a higher Dollar, weaker equities, rising global interest rates and slack Euro zone numbers, one has to be very impressed! Fundamentally we have to fear a bit of a setback off a tempering of demand expectations, but apparently the energy markets didn't get that memo this morning. We wouldn't get short this market, but we would suggest that bulls consider banking profits for a possible temporary correction ahead.
Natural Gas:
With more than a 12% move off of the recent lows in May natural gas the upside tilt looks to have run out of steam this morning, but the market has now lifted itself clear of its trading range for the past 2 1/2 weeks and that has increased the talk of a some form of major bottoming. With recent BTU price comparisons showing natural gas to be very cheap versus petroleum energy sources and the US Administration talking up its 5 Year energy plan that includes many environmental efforts, it is possible that a number of natural gas shorts are planning to exit rather than push for the last drop of the downside move. The prospects for serious revisions to EIA natural gas supply data may also be a catalyst for this recent bounce, but the recent strength in US economic data has also provided a great deal of support to the market. We can't rule out a bit of back and fill action ahead, but we would be surprised to see June natural gas trade consistently back below the $4.20 level.
The stock market is showing signs of correcting a shorter term overbought condition. It is also possible that the market is fearful of another interest rate hike threat, with the US FOMC meeting minutes scheduled for release later today. It is also likely that renewed tension in the Euro zone, off the terms of the Greek support plan is serving to push some global investors to the sidelines this morning. In short, the market seems to need a little back and fill on the charts and that could clear the way for a setback to up trend channel support lines. As suggested yesterday, the Nasdaq has been relatively more overbought than the S&P and that could mean the Nasdaq is destined to correct a little more aggressively today. However, there doesn't appear to be a large amount of anxiety in the marketplace today and that should reduce the magnitude of the correction. With the Australian central bank rate hike overnight and the Chinese indicating they might allow a wider trading band for their currency, that would seem to leave the prospect of up beat macro economic sentiment in play. In conclusion, we don't see an end to the uptrend pattern but the presence of the FOMC statement later today could offer enough of an excuse to knock prices back throughout the session today.
DOW:
The June Mini Dow enters the trading session today right on a two month old up trend channel support line of 10,880, with slightly lower support seen down at 10,860. We don't see the scope for an aggressive setback in prices today but the June Mini Dow has forged some fairly significant gains since March 31st and therefore we have to give the early edge to the bear camp this morning. On the other hand, this market has shown the ability to correct quietly and quickly. We would think that longs with stops just below 10,750 will be able to ride through the choppy to lower action today.
The rally brought the market to a new contract high. 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. A positive setup occurred with the close over the 1st swing resistance. The near-term upside target is at 10970. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 10951 and 10970, while 1st support hits today at 10889 and below there at 10847.
S&P:
The S&P has forged some moderate gains over the last 5 or 6 trading sessions and therefore it is short term overbought. However, with the last COT positioning report showing the Non Commercial and Non Reportable combined position to be holding a minimal spec long position, we don't expect to see an aggressive corrective slide in prices directly ahead. Near term support and a possible target into the early afternoon trade today is 1175.00.
The market made a new contract high on the rally. 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. The market's close above the 2nd swing resistance number is a bullish indication. The next upside objective is 1190.68. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1188.37 and 1190.68, while 1st support hits today at 1179.13 and below there at 1172.19.
Bonds:
The Treasury market saw another downside breakout yesterday in the face of another set of better than expected US numbers, but the trade was also under pressure because of whispers of a possible discount rate hike ahead. Some suggested that lackluster interest in the TIPS supply added to the downside yesterday, but the June bonds were already within 3 ticks of the ultimate lows before the TIPS results were known. In looking forward, the market seemed to reach a fairly excessive oversold condition around the lows Monday and with a small measure of renewed flight to quality concern on the Greek debt bailout terms, it is possible that Bonds and Notes might catch a weak bid off geopolitical developments. We also suspect that higher yields might work in the favor of the upcoming auction flows, especially if Euro uncertainty remains in the headlines and equities are trading a touch lower. However, with a Chicago Midwest Manufacturing report due out an hour before the 3 Year note auction results and some expectations calling for an up tick in that report, the short covering window this morning might be rather narrow. With the Bank of Australia raising interest rates overnight and suggesting more hikes might be on the way that in turn facilitates and fosters concern that the US is set to follow that same path. Therefore, traders might be lucky to see short covering rallies in excess of 3/4 point in either bonds or notes directly ahead. In fact, if there is going to be a rally today, we would expect to see that early in the trading session today, as the trade attempts to play up the flight to quality situation in Europe and some in the trade attempt to talk up the potential demand for the 3 Year notes. In the end, we fear the results of the auction, as the trend for the US instruments seems to have turned down recently and the US numbers certainly seem to discourage aggressive participation. Therefore, we wouldn't be surprised to see the June bonds attempt to return to the 115-03 level, with June Notes possible managing to return to the 115-20 level prior to mid session today. We would suggest that aggressive traders wait for a rally into and through the US number flow and then look to get short again in the face of the auction results at 12:00. In the end, the down trend should remain in place even if the market shows signs of correcting or balancing its oversold technical condition this morning. With the FOMC meeting minutes scheduled for release later today, one should expect to see something hawkish from the Fed or perhaps more dissention in the ranks regarding when the central bank will move to raise historically low interest rates.
Momentum studies are declining, but have fallen to oversold levels. The close below the 9-day moving average is a negative short-term indicator for trend. The market's close below the pivot swing number is a mildly negative setup. The next downside target is 113-200. With a reading under 30, the 9-day RSI is approaching oversold levels. The next area of resistance is around 114-280 and 115-150, while 1st support hits today at 113-310 and below there at 113-200.
US Dollar:
As the markets fully return from the holidays, it would appear that strength in the Dollar against European currencies has also returned today, as sovereign debt problems have been returned back to the market's forefront. While generally stronger, the Dollar has lost some ground against the Yen as that currency is also receiving a boost from the feared problems in Europe, as the Yen's severe sell off over the past few weeks might have made it a 'bargain' destination for some near-term flight to quality money. However, recent strength in US economic numbers has made US interest rate hikes more of a probability than a possibility, with only timing the main question now and that is lending support to the Dollar. With a host of softer economic numbers from the Euro zone overnight, the presence of renewed flight to quality concerns and the prospect of another positive US economic reading later this morning, one has to leave the Dollar with the edge. In fact, in the face of somewhat hawkish Fed meeting minutes release we wouldn't be surprised to see the June Dollar index manage a rise back to the 81.70 first resistance zone on the charts.
EURO:
Last week's recovery rally in the June Euro appears to have been fully derailed by news out of Greece this morning, with the market already headed back in the direction of old lows. It appears now that Athens is looking to renegotiate their recent deal with the EU, trying to eliminate the participation of the IMF as well as coming directly to the US to sell 'Yankee' Greek debt. While last month's problems were never fully extinguished, it is surprising that they would reappear in such short time. Although the funds leaving Greek banks today may not leave the EU entirely, it's a good guess that some of them will be taking a flight across the Atlantic toward the US. In addition, a rise in Spanish unemployment and lower German car registrations puts the contrast in economic prospects on either side of the Atlantic into a clearer focus. As long as there is such a contrast in near-term economic prospects and interest rate differential conditions, look for the June Euro to be on the defensive versus the Dollar. Near term downside targeting in the June Euro is at least 1.3312 and possibly down at 1.3291.
Gold:
Despite seeing news overnight of the prospect of rising seasonal demand in India, the gold market came into the US Tuesday trade under moderate pressure. Clearly a rising Dollar was serving to undermine the gold trade but some traders suggested that the weakness this morning was the result of renewed concerns that the Greek debt situation was going to slow or derail the recovery effort in the Euro zone. Typically the gold market is undermined in the wake of rate hike news and with the Aussie's hiking rates last night and seemingly threatening even more hikes in the future, that might have served to dampen sentiment toward gold prices. Apparently the gold market isn't that interested in the prospect of reduced South African gold production off striking miners and that suggests that the focus of the gold market is on demand instead of supply side issues.
Silver:
The silver market is seeing some initial corrective action this morning in the face of a higher Dollar, weaker global equity prices and also because of a series of slack Euro zone economic readings. The silver market has recently shown some divergence with the gold market, with silver seemingly less reliant on the minor ebbs and flows in the US Dollar. One might have expected silver to have garnered some support from news of a South African gold mining strike overnight but recently silver and gold haven't been locked on to classic supply side developments. Some traders expressed concern over the inability to sustain May silver prices above $18.00, while others were emboldened by the May silver contract's ability to hold above the prior session's low in the early Tuesday morning trade. However, with copper and platinum prices lower early and energy prices waffling around both sides of unchanged, the outside market action would seem to be favoring the bear camp in the early going today.
Crude Oil:
While May crude gave back some of its gains overnight, it remains way above its recent trading range as the sharp rally over the past week has held prices near 17-month highs. Today's strength in the Dollar may have taken some of the steam out of the market, but news of supply constrictions like the Tesoro refinery explosion and from the hijacked super-tanker yesterday continue to underpin the recent move higher. Although relatively strong US economic numbers will continue to support energy prices, the market has already begun to focus in on this week's storage numbers and that is also serving to limit the upside. Early expectations are that the recent trend of crude oil stock builds and product stock draws are likely to continue and since gasoline stocks are still flush, the market probably won't be able to spin the stocks situation into a positive just yet. However, in looking at crude oil prices waffling around both sides of unchanged this morning, in the face of a higher Dollar, weaker equities, rising global interest rates and slack Euro zone numbers, one has to be very impressed! Fundamentally we have to fear a bit of a setback off a tempering of demand expectations, but apparently the energy markets didn't get that memo this morning. We wouldn't get short this market, but we would suggest that bulls consider banking profits for a possible temporary correction ahead.
Natural Gas:
With more than a 12% move off of the recent lows in May natural gas the upside tilt looks to have run out of steam this morning, but the market has now lifted itself clear of its trading range for the past 2 1/2 weeks and that has increased the talk of a some form of major bottoming. With recent BTU price comparisons showing natural gas to be very cheap versus petroleum energy sources and the US Administration talking up its 5 Year energy plan that includes many environmental efforts, it is possible that a number of natural gas shorts are planning to exit rather than push for the last drop of the downside move. The prospects for serious revisions to EIA natural gas supply data may also be a catalyst for this recent bounce, but the recent strength in US economic data has also provided a great deal of support to the market. We can't rule out a bit of back and fill action ahead, but we would be surprised to see June natural gas trade consistently back below the $4.20 level.
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