Thursday, March 11, 2010

U.S. equity markets are expected to open weaker this morning but off their lows. Last night’s news that China’s inflation was higher than expected, fueled speculation of a rate hike
which helped drive down demand for higher yielding assets. The lack of follow-though to the downside has triggered a short-covering rally which is helping to boost equity prices from their overnight
lows. Yesterday the March E-mini S&P 500 stopped at its January high of 1148.00, triggering a profit-taking break. The overnight rally from its low and building momentum could trigger another
test of this level today. The daily swing chart suggests a breakout over this level will ignite a rally to 1156.00 by March 12th.

June Treasury Bonds are trading lower. Traders are selling Treasuries in anticipation of a rate hike by China. Technically, this market is hugging a 50% line at 116’04. This price
will dictate the direction of the next move. Holding above it means the market is discounting the news. Falling below it will indicate a further drop to 115’06. Today’s Weekly Initial Claims Report
should …

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March 10, 2010

Euro Building Support Base for Potential Upside Breakout

The U.S. Dollar was mixed in light trading at the close in an unusual day as the normal correlations between the Dollar, gold and equities at times were not working. The lack of major
U.S. economic reports this week is still influencing the trade although this will change with Thursday’s Weekly Initial Jobs Claims Report.

Early in the session it was clear that traders were looking for risk as the stock indices rose with the March …

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Wednesday, March 10, 2010

Stocks Continue to Rally despite Drop in Volatility

U.S. equity markets are trading firm overnight after yesterday’s surge to the upside. Buying pressure dried up late in the session, but no damage was done to the uptrend. Volatility
is falling which is making traders appear complacent. This could be both good and bad. On the good side, it could mean traders are gaining confidence in the recovery which will send prices higher. On
the bad side, too much complacency leaves the markets vulnerable to a bearish surprise or could trigger the start of a sizeable correction. At this time let’s just focus on the trend and determine
what it is telling us. The main trend is up in the March E-mini S&P 500. The swing chart indicates 1156.00 is the next upside target by March 12th.

June Treasury Bonds are trading lower but finding support at a 50% level at 116’04. If this area fails to hold, then look for a further correction to 115’24. A pick-up in demand for
risky assets and additional supply concerns is putting …

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