We Would Take a Lot of Direction From US Claims Figures

OVERNIGHT CHANGES THROUGH 6:05 AM (CT): S&P 500 -330, DOW -19

The stock market comes into the action today well off the recent highs and seemingly giving off the impression of sagging momentum. One might have expected favorable Chinese economic data to have bolstered equity prices this morning but that news was countervailed by suggestions that the outlook for recovery in many countries is currently too upbeat for reality. The market continues to be concerned about the push for health care reform and perhaps some investors are uneasy about the threat of financial reform, but in general we think that market has lost some upside momentum because of the lack of US economic news released so far this week. In looking forward, the bull camp seems to need some fresh favorable news from the US claims data this morning and if various analysts are correct in their assumptions, the severe February weather probably restrained activity. Therefore it is possible that claims figures will now begin to show further improvement, as today's data should be well beyond the influence of last month's weather. In the end, favorable Chinese data this week should provide the bull camp with initial support but apparently the bull camp needs some fresh headline type help to continue the 1 1/2 month old uptrend pattern.

S&P 500: The up trend pattern in the S&P appears to remain in place into the opening today, even if upside momentum is waning somewhat. However, the S&P might get a lift from favorable Citi Group guidance due out later today. Like the rest of the market, we think that S&P bulls need some positive news from the US claims figures, as that data will technically be the first important scheduled data flow of the week. Up trend channel support in the S&P today is seen at 1129.80, with close-in support on the charts pegged at 1138.00. The bulls retain an edge because of momentum, but that edge isn't very definitive.

DOW: Technically the Mini Dow has forged a pattern of lower highs this week. However, solid uptrend channel support in the June contract isn't seen until 10,370 today, with that support rising to 10,396 on Friday morning. Some traders are also suggesting that the failure to sustain above 10,500, hints at the need to correct and balance the technical picture in the marketplace. With only 7 days left before the President's self imposed deadline for passing health care reform, it is possible that rhetoric and political wrangling on Health care reform will serve to increase uncertainty toward large cap stocks in the Dow. Ultimately, we think the Mini Dow can hold close-in support of 10,457 today, especially if the US claims data early today give off a supportive tilt.

NASDAQ: The Nasdaq comes into the action today just under the prior session's highs and seemingly still within a bullish framework. While the tech sector news continues to provide support to the market, we also get the sense that the market has the appearance of rising without a distinctly bullish fundamental argument. Therefore, seeing something positive from the claims data this morning is probably important to the bull case, especially since the European stocks were showing mixed to slightly lower action in their afternoon trade. In looking back to the action this week, the Nasdaq looks to continue to outperform the rest of the market on the upside and hold up better than the rest of the market in the face of any slide in prices. Critical support in the Nasdaq is seen today at 1912.

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 (JUN) 03/11/2010: 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. Market positioning is positive with the close over the 1st swing resistance. The next upside objective is 1148.25. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1145.40 and 1148.25, while 1st support hits today at 1137.60 and below there at 1132.65.

S&P E-MINI (JUN) 03/11/2010: 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. A positive signal for trend shortterm was given on a close over the 9-bar moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside target is 1149.68. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1146.37 and 1149.68, while 1st support hits today at 1136.63 and below there at 1130.19.

NASDAQ (JUN) 03/11/2010: A new contract high was made on the rally. The daily stochastics have crossed over up which is a bullish indication. Momentum studies are trending higher but have entered overbought levels. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. The next upside objective is 1923.50. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 1920.00 and 1923.50, while 1st support hits today at 1909.00 and below there at 1901.50.

DOW (JUN) 03/11/2010: Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. The daily closing price reversal down puts the market on the defensive. The market has a slightly positive tilt with the close over the swing pivot. The next upside target is 10521. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 10503 and 10521, while 1st support hits today at 10477 and below there at 10470.

MINI-RUSSELL 2000 (JUN) 03/11/2010: The market made a new contract high on the rally. The crossover up in the daily stochastics is a bullish signal. Rising stochastics at overbought levels warrant some caution for bulls. A positive signal for trend short-term was given on a close over the 9-bar moving average. Market positioning is positive with the close over the 1st swing resistance. The near-term upside objective is at 680.9. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 676.9 and 680.9, while 1st support hits today at 667.6 and below there at 662.2.

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