Apparently the Bull Camp Continues to Get the Benefit of He Doubt

OVERNIGHT CHANGES THROUGH 6:05 AM (CT): S&P 500 +120, DOW +11

The tech sector and pharma shares are doing their part in supporting the broad market this week. In fact, in looking at the charts yesterday, the market was able to reject a noted selling wave and make a positive close and a fresh new high for the move in many market measures. The market could have been cheered by favorable Chinese trade data overnight, but unfortunately for the bull camp in stocks, the number flow out of the UK and the Euro zone overnight mostly served to temper the optimism fostered by the Chinese news. In looking forward, the fear of surging debt and ongoing debt ratings concerns toward the UK, seem to provide an ongoing threat to the bull camp. However, recent Fed dialogue was supportive of the bull theme, as the Fed's Evans indicated that the US Fed was likely to remain with the easing stance for the next 3 or 4 Fed meetings. Apparently the stock market isn't overly concerned about the lack of US data flow this week, as the trade has generally managed to keep positive momentum in place, off very little headline assistance. Therefore, we have to leave the edge with the bull camp, but we are concerned with the amount of deficit news that could be seen in the Wednesday trading session.

S&P 500: The March S&P mostly remains in a positive tilt in the early going today and that is somewhat surprising considering that the trade is fearful of financial sector punishment within the impending financial reform push. Up trend channel support in the March S&P is seen at 1130.50 today, with that support level rising to 1134.75 on Thursday. However, there will be plenty of focus on US debt today, with a US Budget reading, another US auction and US Treasury Secretary testimony on the US 2011 budget and that flow of news could end up favoring the bear camp toward the end of the trading session today.

DOW: The up trend channel in the March Mini Dow seems to remain in place, despite ideas that upside momentum is slowing. A buyout in the Biotech sector overnight seems to be providing the broad market with a slight lift in the early going today especially after the markets saw some slightly disappointing economic news from both the UK and the Euro zone overnight. Up trend channel support in the March Mini Dow is seen at 10,416 today and that trend line support rises to 10,444 on Thursday. The bulls have the trend, even if the trade seems to be rising without a distinctly positive fundamental force. Initial resistance in the March contract today is seen at 10,591.

NASDAQ: The March Nasdaq managed a very impressive range up extension in the prior trading session and has managed to hold the brunt of those gains into the Wednesday morning trade. Clearly favorable tech sector news has flowed from a number of sources this week, with favorable merger and buyout news from the Biotech sector seen again overnight. At least in the early trade today, the March Nasdaq would seem to have initial support at even number 1900 and there might be little in the way of resistance until 1912. Unless the market starts to place its vote on health care reform, the bias looks to remain up.

STOCKS TECHNICAL OUTLOOK:

Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

S&P 500 (MAR) 03/10/2010: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's short-term trend is positive on the close above the 9-day moving average. The outside day up is somewhat positive. Market positioning is positive with the close over the 1st swing resistance. The near-term upside target is at 1153.55. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1149.00 and 1153.55, while 1st support hits today at 1135.80 and below there at 1127.15.

S&P E-MINI (MAR) 03/10/2010: 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 upside daily closing price reversal gives the market a bullish tilt. The market setup is supportive for early gains with the close over the 1st swing resistance. The near-term upside target is at 1153.18. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1147.37 and 1153.18, while 1st support hits today at 1133.63 and below there at 1125.69.

NASDAQ (MAR) 03/10/2010: A new contract high was made on the rally. 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 outside day up is a positive signal. There could be more upside follow through since the market closed above the 2nd swing resistance. The near-term upside objective is at 1930.00. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 1917.00 and 1930.00, while 1st support hits today at 1886.00 and below there at 1868.00.

DOW (MAR) 03/10/2010: Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. A positive signal for trend short-term was given on a close over the 9- bar moving average. The market's close below the pivot swing number is a mildly negative setup. The next downside target is 10480. The next area of resistance is around 10540 and 10560, while 1st support hits today at 10500 and below there at 10480.

MINI-RUSSELL 2000 (MAR) 03/10/2010: The market made a new contract high on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. A positive signal was given by the outside day up. Market positioning is positive with the close over the 1st swing resistance. The next upside target is 679.7. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 674.9 and 679.7, while 1st support hits today at 664.1 and below there at 658.2.

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