The U.S. Dollar Index chart (PowerShares DB US Dollar Index Bullish (NYSE:UUP) closed higher again by 0.54 cents for the week at a new weekly closing high for the year. While this is very impressive the dollar failed to close above the $82.00 level. On many trading days it will trade above $82.00, however, it often sells off sharply to close below that important resistance level. As long as the U.S. Dollar Index remains above the $79.00 level the weekly bias is to the upside. The weekly resistance levels are $82.00, $83.00, and $84.00. The weekly support levels for the dollar are $80.00, $79.00, and $78.50. Knowing your key levels is critical to your success as a trader or investor - knowing how to use these levels properly will enable you to earn big profits out of the current market environment.
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By InTheMoneyStocks.com on May 2nd, 2010 3:01pm Eastern Time
The S&P 500 Index, reflected in the SPDR S&P 500 ETF (NYSE:SPY) declined sharply last week losing $30.59 points by the close on Friday. It was a very volatile week of trading as three of the five trading sessions resulted in over 20 point swings for the index. The weekly charts have a sharp reversal candle in place. Normally, this type of short term pattern would lead to more downside, however, this market has rallied after every dip and a one week pullback does not make a new trend. It now appears to be a traders market as many leading stocks in the S&P 500 are broken technically, and others are still in a bully rally. The weekly support levels for the S&P 500 Index are $1175, and $1150. The weekly resistance levels for the broad based index are $1225 and $1250.
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BOTH S&P500 and DJIA FAIL TO CLOSE above their 200-Week MAs. S&P never touched its 200-weem MA of 1225, while the Dow managed only an intraweek close above the its 200-week MA before moving below it. S&P500 however, will end the month HIGHER despite a monthly DECLINE in BRAZILs BOVESPA index. This is the first time a monthly rally in S&P500 escapes a decline in Brazilian equity benchmark index since August 2008. It could be argued that Brazils selloff resulted from this weeks 75-bp rate hike, which is the first tightening since September 2008. This weeks rate hike is far from upsetting the recovering Brazil economy, but 2 more rate hikes of 50-75 bps into end of summer may raise fears as they coincide with Brazils election. Going back to the S&P500 and the Dow, both of these will face the US jobs report as well as the latest damage in US financial stocks after Goldman Sachs was downgraded to a sell by S&P.
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By InTheMoneyStocks on April 30th, 2010 9:42am Eastern Time
The U.S. Dollar Index is lower this morning by 0.36 cents to $81.65. Often when the dollar is lower to start the morning the S&P 500 futures are positive. This morning that is not the case as the futures are down 1.00 point.
Gold and oil are both higher this morning on the back of the weaker U.S. Dollar Index. Rumors out of Europe today are saying that there will be a resolution for Greece announced over the weekend. Have we not heard that before? The SPDR Gold Shares (NYSE:GLD) is trading higher this morning by $1.01 to $115.33. The U.S. Oil Fund (NYSE:USO) is trading higher this morning by 0.33 cents to $41.35. While the spot price in light sweet crude is higher by 0.82 cents to $85.99.
Naturally when the U.S. Dollar Index is down most commodity and inflationary stocks will be positive. However, should the dollar catch a bid it could put pressure on the markets as commodity and inflationary stocks are likely to decline.
Traders and investors that want to trade the U.S. Dollar index to the long side can use the PowerShares DB US Dollar Index Bullish (NYSE:UUP). For the traders and investors that would like to trade the dollar to the downside or short the currency can use the PowerShares DB US Dollar Index Bearish (NYSE:UDN).
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By Gareth Soloway on April 30th, 2010 11:51am Eastern Time
Credit card providers like MasterCard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), American Express Company (NYSE:AXP) and Capital One Financial Corp. (NYSE:COF) have had an amazing run, but recently they have fallen back slightly. While they have had a meteoric rise in the last few months and since the March 2009 lows, the big question going forward, is their credit default risk and has that been priced in?
With unemployment levels remaining near their high level of 9.7% and the real unemployment levels near 18%, one has to wonder if these credit card providers are not pricing in the risk for continued high default levels. Jobless claims have remained stubbornly high, seeming to find themselves around 450k average each week. They have not fallen like most economists would have liked. Everyone says this is going to be a jobless recovery which is code word for massive government stimulus. Without jobs, can people pay their credit cards?
Next Friday the markets get the Unemployment Report and Non Farm Payrolls. This could be another clue as to the recovery and how these credit card providers will fair.
Gareth Soloway
Chief Market Strategist
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EURO STABILIZATION is occurring despite CAD WEAKNESS, while YEN IS THE WEAKEST currency so far today. EU officials may be expected to firm up an agreement in Greece this Sunday. More talk of a 3-year deal for Greece in the size of EUR 120-150 billion, which means as much as EUR40 bln could be disbursed. The $1.3320 resistance is being tested as shown in yesterdays chart http://chart.ly/xhgxcv , which could pave the way for a temporary ceiling near $1.3385-90. CAD remains weak after those remarks from BoCs Carney warning about sovereign headwinds on Canada. USDCAD supported at 1.0020 but has yet to regain 1.0080. Both US and CAN Q1 GDP are released. More analysis on that later.
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ONE THING WE LEARNED is that ever since the intensity of the EURUSD decline in February, it HAS NEVER recovered more than 3% off its multimonth lows. SEE CHART http://chart.ly/xhgxcv This means the pair is unlikely to break above $1.3510 from yesterdays 12-month lows before resuming towards the $1.31 figure. MOODYs SAYS Its REVIEWING GREECE SOVEREIGN RATING and downgrades more Greek banks. EURO RETRACEMENTS CONTINUE TO FAIL key trend lines as no aid is possible before the May 9 elections in Germany. Size of Aid, Timing of Disbursement and Additional Austerity remain the 3 obstacles to any extended rebound in the euro. $1.3320 stands as the immediate trend line resistance, a break of which could reflect surprise announcement and extend recovery to $1.3390. Key resistance remains at the top of the 5-week channel at $1.3530. But once again, we stick to $1.30 target before quarter-end and $1.27 before Summer end.
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By Nicholas Santiago on April 29th, 2010 12:44pm Eastern Time
The major market indexes are all rallying higher today. The worries out of Europe seem to be subsiding today as the Euro trades higher against the U.S. Dollar. The bull run seems to be alive and well once again after the scare in the market earlier in the weak.
Today we do have a few leading stock names that are not participating in the strong stock rally. The first major stock that is declining today is Proctor & Gamble Co (NYSE:PG). The stock is trading lower by $1.53 to $61.65 after reporting earnings that failed to beat analysts expectations. This stock does have short term daily chart support around 61.00 area and more around the 60.00 level.
The next major name that is not rallying with the rest of the major stock indexes is United States Steel Corp (NYSE:X). This is a leading stock in the steel producing industry. Today the stock is lower by $1.34 to $57.08. The stock has short term daily chart support around the $55.00 level and more around the $50.00 area.
Finally the last major name that is declining sharply today is Cliffs Natural Resources Inc (NYSE:CLF). This stock is a leading iron ore pellet producer and a market mover. Today the stock is trading sharply lower after reporting earnings. Cliffs Natural Resources Inc is trading down $5.11 to $65.08. The stock will have short term daily chart support around the $61.00 area.
Rarely does the market rally so sharply to the upside without some of its recent leading stock names. Today the major indexes are all sharply higher, however, they have left a few leading names behind. The leading sector today looks to be the Dow Jones Transportation Average (NYSE:IYT).
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By Gareth Soloway on April 29th, 2010 12:57pm Eastern Time
Something I have noted recently is how the metal stocks have remained so weak in recent weeks even when the markets have ripped higher. It is truly something strange to behold. Today, it is no different. United States Steel Corporation (NYSE:X) is lower by almost 2.50% and AK Steel Holding Corporation (NYSE:AKS) is lower by 3.00%. The one bright spot is coming from a small bounce in Southern Copper Corporation (NYSE:SCCO) which is having a rare bounce day of 1.20%.
Bottom line is this. It is hard to take a market seriously when key stocks that make up an economic rebound cannot catch a bid. The chart on AK Steel is about as ugly as it gets. Show me these stocks hitting new highs and I may actually think the market has significant upside. Until then, I remain cautious on today's market bounce.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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YEN DROPS THE MOST as FOMC STATEMENT a marginal upgrade of its economic outlook, while maintaining the extended period phrase regarding exceptionally low levels of the federal funds rate, to which Kansas Feds Hoenig remains the sole dissenter. USDJPY maintains uptrend in weekly channel, set to test 95.20 as prelim target. Whether the Greece Factor was responsible for pushing the Fed to maintain the dovish language is very likely, but from this juncture, markets are back to worrying about the Eurozone and POSSIBLY INCLUDING ITALY, whose debt/GDP ratio is 116% of GDP, GREATER than PORTUGALs 85% of GDP, SPAINs 66.3% of GDP but less than Greeces 124% of GDP. So WHY NOT ITALY? In the meantime, traders may show another short-lived rebound in EURUSD towards $1.3280 before the next selling wave emerges-barring any concrete announcement. We still have US GDP later this week.
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