Bulls Have the Edge But They Might Need Fresh Fodder From the Headlines

OVERNIGHT CHANGES THROUGH 6:05 AM (CT): S&P 500 +30, DOW +3

The S&P did manage another new high for the move today and in the process that index reached the highest level since January 20th. While the bear camp hopes that the US economy will come back into question soon, the monthly payroll readings on Friday at least temporarily calmed the double dip recession chatter. International equity prices were temporarily cheered on the Greek situation, off suggestions from the French President who suggested that the EU would stand behind their troubled member state. However, the markets still seem to be a bit on edge into the Monday trade, perhaps because there still isn't a visible means of support for Greece from the EU. Apparently a number of noted technical traders are touting a major decline ahead, but those predictions might be getting added air time today because today is exactly 1 year since the ultimate sub-prime low. In looking forward, the scheduled data flow will be reduced today and that could turn the focus of the trade toward internal corporate news and perhaps away from the big picture analysis. At least in the early going today, there would not appear to be a reason to take control away from the bull camp, especially if the market sees the ongoing liquidation of various AIG components, as a sign that the US government is successfully unwinding its financial mess. 

S&P 500: The March S&P did manage a fresh new high for the move before giving back some ground early this morning. The bulls point to the 1147 level as critical resistance zone and potentially as a target, while the bull camp is hopeful that the S&P will fail at close-in support of 1133.90. The Commitments of Traders Futures and Options report as of March 2nd for S&P 500 Stock Index showed Non-Commercial traders were net short 68,358 contracts, a decrease of 1,026 contracts. The Non-reportable traders were net long 60,085 contracts, an increase of 3,636 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 8,273 contracts and that represents a decrease of 4,662 contracts in the net short position held by these traders. With the Spec position as of last Tuesday net short, it would appear that the S&P has the most technical buying capacity of the Mini Dow, Nasdaq and S&P. 

DOW: The March Mini Dow did manage a fresh new high for the move overnight but it failed to take out the January 21st high. The path of least resistance appears to be pointing upward today, unless Washington disrupts the party with more political fighting on the health care reform plan. Regardless of the compromises being made on health care the stock market from time to time has worried that reform will serve to raise their employee expenses. The Commitments of Traders Futures and Options report as of March 2nd for Dow Jones Index $5 showed Non-Commercial traders were net long 20,974 contracts, an increase of 5,717 contracts. The Nonreportable traders were net long 2,861 contracts, an increase of 1,331 contracts. Non-Commercial and Nonreportable combined traders held a net long position of 23,835 contracts. This represents an increase of 7,048 contracts in the net long position held by these traders. Therefore, the Mini Dow has become long enough, to be considered technically overbought.

NASDAQ: The Nasdaq was unable to carve out a fresh new high for the move in the overnight action and that gives off the impression of an intermediate top on the charts. The Commitments of Traders Futures and Options report as of March 2nd for Nasdaq Mini showed Non-Commercial traders were net long 63,673 contracts, an increase of 24,598 contracts. The Non-reportable traders were net long 2,626 contracts, an increase of 5,548 contracts, which represents a change from a net short to net long position. Non-Commercial and Non-reportable  combined traders held a net long position of 66,299 contracts. This represents an increase of 30,146 contracts in the net long held by these traders and that could suggest that the Nasdaq has become somewhat overbought with a sharp post COT report rally. The trend might remain up as long as the March Nasdaq manages to hold above close-in support of 1877.

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) 03/08/2010: 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 market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. The next upside objective is 1149.80. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 1144.09 and 1149.80, while 1st support hits today at 1127.30 and below there at 1116.20.

S&P E-MINI (MAR) 03/08/2010: 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. There could be more upside follow through since the market closed above the 2nd swing resistance. The near-term upside target is at 1150.81. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1145.62 and 1150.81, while 1st support hits today at 1128.38 and below there at 1116.32. 

NASDAQ (MAR) 03/08/2010: Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. 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 near-term upside target is at 1911.75. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 1901.50 and 1911.75, while 1st support hits today at 1869.50 and below there at 1847.75.

DOW (MAR) 03/08/2010: 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. Follow through buying looks likely if the market can hold yesterday's gap on the day session chart. With the close over the 1st swing resistance number, the market is in a moderately positive position. The near-term upside target is at 10535. The next area of resistance is around 10506 and 10535, while 1st support hits today at 10440 and below there at 10403. 

MINI-RUSSELL 2000 (MAR) 03/08/2010: A new contract high was made on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. A positive signal for trend short-term was given on a close over the 9-bar moving average. There could be more upside follow through since the market closed above the 2nd swing resistance. The next upside target is 675.7. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 671.5 and 675.7, while 1st support hits today at 657.7 and below there at 648.0.

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