Monday, February 1, 2010

Morning Post

Good morning. I hope you had a good weekend. Getting this week cranked up early with the futures up over 6 points on the minis. After Fridays sell off and given the overbought conditions, the buyers had to show up sooner or later. Question is, how long will they hang around? Friday's dramatic reversal was a sign of things to come as I believe you have to begin viewing the market as having more downside potential/risk than upside as the tide has most likely turned.

Earnings calendar -Tomorrow is a bigger day as we get into the energy sector.

Economic calendar - Mfg index and construction spending today along with a treasury auction (3 and 6mo)

SPX daily - Remember, the market does not "have to" do anything, looks can be deceiving and beauty is only skin deep. SPX has completed a 61.8% retracement of the rise off of 1028. S Sto is embedding, RSI is at 33.3, The gap on MACD is huge (8pts) and the hist has not turned, ADX is doing it's best Letterman impersonation showing a huge gap, and other indicators are showing similar characteristics. The lower BB is getting abused again. At this time I believe a correction is overdue and downside should be limited simply because of oversold conditions and some divergences on shorter time frames. 1055 is my max downside at this time and if it turns I'm looking at 1101 as the first target and then the gap at 1115. I do not see it moving over the 1131 level at all, but with this market you never know.
Gold - 1066 level has all kinds of support. I do not think this is the time to jump in even though it is pretty oversold.
Dollar - Continues strengthening. Over $5 move in DXY since 11/23 (7%). It is getting overbought but might have a little room to run yet.
Oil -  Sitting on support and the 23.6% retracement (I'll give you charts on all these tomorrow) and it is oversold. This one may warrant some buying attention at this level.
Natgas - Broke TL and support and is channeling down with a short series of lower lows and lower highs. 4.67 is the 38% retracement. It is at 5.13 now.
EUR/JPY -  124.37 is the next support point (and that is a weak one). When it took out 126 that should have been it. Channeling south. Support has now become resistance.
EUR/USD - 139.17 below the 140 Mendoza line. 138 to 135 is the 50 to 61% retracement zone. 136 is where C=A is this is a corrective. If it is a major wave we're in a 3 south.

GL out there!