Minor Negatives Haven't Deterred the Bull Camp More Minor Gains Ahead

OVERNIGHT CHANGES THROUGH 6:05 AM (CT): S&P 500 +520, DOW +41

The stock market continues to get the benefit of the doubt as prices early today have technically remained in an upside breakout on the charts. While there would not appear to be any fresh major negatives from the Greek debt front, there are threats of a possible strike brewing in response to the upcoming Greek austerity program and that could eventually rekindle global uncertainty and undermine equities. It would also appear that the Pound has remained under pressure overnight and that could be another factor prompting anxiety in the marketplace. On the other hand, one could suggest that hotter than expected Euro zone inflation readings overnight actually offer up a positive tilt from the economic front, as that result might insinuate movement in that economy. However, some traders have suggested that the equity markets would still be negative on the year if it were not for extensive merger and acquisition activity and that highlights the lack of forward progress on the recovery. Given that the report slate is thin today, the trade will probably look to early weekly chain store sales figures for some guidance in the early going. It is possible that portions of the market will see some residual support from news yesterday afternoon, that Qualcomm was set to buyback $3 billion of its own shares. However, the prospect of fresh details from the financial reform effort in the US and a GM recall has certainly served to temper some of the initial bullishness in place from the prior trading session.

S&P 500: Apparently news of a GM recall, downside follow through in the Pound and talk of an upcoming Greece strike as well as rumors that Friday's payrolls could be weaker due to poor weather in February is of little concern to the S&P. Therefore one has to leave the edge with the bull camp this morning, especially since there are not any scheduled data points this morning from the US to derail the upward bias. There are US auto sales figures due out around mid session and that might yield some profit taking incentive but only after prices have forged some follow through gains earlier in the trade.

DOW: The March Mini Dow comes into the session this morning right on the prior session's highs and seemingly capable of pushing prices higher. We do see moderately significant resistance at 10,434 (the February 10th high) in the March Mini Dow contract today but without a noted deterioration in sentiment off a fresh headline development, we have to leave the bulls with a slight edge. At the present time, we see somewhat solid support down at the 10,375 level and therefore one has to fall back to the present trend, which is generally pointing upward.

NASDAQ: As suggested already, the Nasdaq might be garnering some ongoing support from a large tech sector share buyback effort, that was announced yesterday afternoon. Therefore, initial resistance is seen at the even number 1850 level and then again up at 1857. Without a fresh negative headline this morning, we suspect that the March Nasdaq is poised to claw its way into a consolidation trade above the 1850 level.

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) 03/02/2010: The cross over and close above the 60-day moving average indicates the longerterm trend has turned up. 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. Since the close was above the 2nd swing resistance number, the market's posture is bullish and could see more upside follow-through early in the session. The near-term upside target is at 1122.75. The next area of resistance is around 1119.90 and 1122.75, while 1st support hits today at 1109.30 and below there at 1101.55.

S&P E-MINI (MAR) 03/02/2010: The market now above the 60-day moving average suggests the longer-term trend has turned up. Rising stochastics at overbought levels warrant some caution for bulls. The market's shortterm trend is positive on the close above the 9-day moving average. The market's close above the 2nd swing resistance number is a bullish indication. The near-term upside target is at 1123.43. The next area of resistance is around 1120.12 and 1123.43, while 1st support hits today at 1108.88 and below there at 1100.94.

NASDAQ (MAR) 03/02/2010: 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. The gap upmove on the day session chart is a bullish indicator for trend. Since the close was above the 2nd swing resistance number, the market's posture is bullish and could see more upside follow-through early in the session. The near-term upside objective is at 1865.75. The next area of resistance is around 1856.00 and 1865.75, while 1st support hits today at 1829.50 and below there at 1812.75.

DOW (MAR) 03/02/2010: The major trend could be turning up with the close back above the 60-day moving average. A bullish signal was given with an upside crossover of the daily stochastics. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average. A positive setup occurred with the close over the 1st swing resistance. The next upside objective is 10407. The next area of resistance is around 10375 and 10407, while 1st support hits today at 10317 and below there at 10292. 

MINI-RUSSELL 2000 (MAR) 03/02/2010: 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. There could be more upside follow through since the market closed above the 2nd swing resistance. The next upside target is 651.1. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 647.1 and 651.1, while 1st support hits today at 634.1 and below there at 625.1.

CRUDE OIL COMMENTARY

FIRM EQUITY MARKET ACTION GIVING OIL MARKETS AN EARLY UPWARD BIAS

OVERNIGHT CHANGES THROUGH 6:05 AM (CT): CRUDE +38

CRUDE OIL MARKET FUNDAMENTALS: Trading in April crude oil has been choppy and two sided in the early overnight action with oil prices getting a lift from firmer global equity markets but gains being limited by the early strength in the dollar. A lack of major economic reports today could turn oil trading more technically based and tied to the ebb and flow of major outside market influences. So far crude oil has only seen minor pressure from the early strength in the Dollar this morning tied to ongoing concerns over European sovereign debt problems and the political uncertainty in the UK. It also looks as if a stronger gasoline trade and firmer US equities have helped crude oil offset the currency action. Reports that Chile may need to import gasoline due to refinery earthquake damage, reports of refinery glitches in the US and some macro economic optimism tied to yesterday's report showing a stronger than expected gain in personal consumption seems to be providing a more optimistic fuel demand view this morning. Oil prices have also been underpinned by the firmer tone in US equities in the early going. With oil market trading becoming closely tied to the actions in the stock market, it won't be surprising to see April crude oil edge back towards $80 this session, especially if the Dollar starts to lose upside traction. So far oil markets have been able to shrug off a report that Russian oil production hit a new record last month. Oil markets may also be seeing some support from the UAE's oil minister saying that oil market's are well supplied and that oil prices at current levels are acceptable suggesting OPEC is likely to leave quotas unchanged at this month's meeting. Oil traders didn't seem to be troubled that the UAE oil minister sees lower demand for OPEC oil this year. But while April crude oil may have the capacity to track higher on a firmer equity market trade, we also suspect the upside will continue to be capped at yesterday's high. In fact, with most traders expecting to see more than a 1.2 million barrel rise in crude oil stocks and technical indicators for oil at overbought levels, we also suspect that a rally back to $80 will inspire fresh selling. The bulls seem to have the early edge but with the inventory report and key reading on US employment ahead, it won't be surprising to see April crude oil trade within yesterday's price range this session.

ENERGY COMPLEX 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.

CRUDE OIL (APR) 03/02/2010: The daily stochastics have crossed over down which is a bearish indication. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The daily closing price reversal down is a negative indicator for prices. The market's close below the pivot swing number is a mildly negative setup. The next downside objective is now at 76.50. The next area of resistance is around 80.05 and 81.61, while 1st support hits today at 77.49 and below there at 76.50. 

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