By Trader X on April 6th, 2010 2:43pm Eastern Time
It almost seems to never fail. If you happened to read the 9:33 am EST blog post regarding the U.S. Dollar it has played out again. Almost every single day that we see the dollar trade higher before the opening bell at the New York Stock Exchange it will fade from the highs. When the dollar declines most commodity and inflationary stocks will trade higher. These days even banks, and small caps seem to take their lead and move higher as the dollar declines.
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By Gareth Soloway on April 6th, 2010 11:40am Eastern Time
The markets gapped slightly lower today on a stronger dollar. The dollar inched up overnight as word came of more Greece issues. It has truly been amazing that other countries so far have not voiced any problems. Italy, Spain, Portugal and others are obviously on the list of problem countries but have yet to say anything. Any normal economic or trading player knows the problems exist, but for now, the markets seem to avoid it. This market is a classic case of Don't Ask, Don't Tell. As long as the markets have their blinders on, they seem to chug higher.
Today is really no different. Regardless of the initial gap lower, the markets have headed sideways to higher almost every 10 minute candle of the trading day. See the chart below. Volume is now as dry as the Sahara Desert.
The SPDR S&P 500 ETF (NYSE:SPY) is flat to positive on the day. The lunch session is in full swing and the markets await word from the Federal Reserve later, when the FOMC Minutes are released. It is important to note that there has been talk over the last day, of a Federal Reserve meeting, possibly on raising the Discount Rate or other important rates. So far, we have had no word on action.
The financial stocks are driving this market higher today. After the passage of the Healthcare Bill, financial regulation was sure to follow quickly. Speaking opening, it does seem that the rhetoric has quieted down for now. Why you ask? Perhaps because the administration realizes the markets could sell sharply on it. Financial regulation will come, however, it will be done gently, with kid gloves on, as to not upset the markets. That has been the way the administration has handled things. Treat Wall Street like a celebrity, give them what they want and always be gentle. We all know what happened back in January when President Obama was not gentle with his initial talk of financial regulation. The markets dumped almost 10%.
JPMorgan Chase & Co. (NYSE:JPM) is leading the financial stocks today. It is up 1.15%. Wells Fargo & Company (NYSE:WFC) is also leading with a gain of 1.90%. Goldman Sachs Group, Inc. (NYSE:GS) percentage wise is not leading, with a gain of just 0.40%.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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By InTheMoneyStocks.com on April 6th, 2010 9:33am Eastern Time
The stock index futures are lower this morning as the U.S. Dollar Index is higher by more than 0.50 cents to 81.60. Usually when the dollar is stronger to start the day the stock index futures will be weaker and negative ahead of the open. Today the S&P 500 e-mini futures contract is down 4.50 points before the open.
The question that every trader is asking this morning is, can the dollar hold its overnight gains? Often the dollar will fade or decline around the opening of the New York Stock Exchange. When this decline in the dollar occurs, as a result it lifts most commodity and inflationary stocks. Traders can follow the Powershares DB U.S. Dollar Index ETF (NYSE:UUP) to see the reaction in the dollar throughout the day.
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GBP is the day's weakest currency and JPY is the strongest out of a group of top traded 12 currencies. GBPUSD hits fresh session lows despite the strongest UK construction PMI in over 2 years. PM Gordon Brown is expected to formally call the election on May 6. Mixed opinion polls are said to be the reason behind GBP weakness, specifically an ICM poll in the Guardian showing the Conservatives lead being cut to just 4 points. Other surveys continue to show Conservatives lead at double digits. Technically, cables failure at $1.53 remains prominent, just as EURUSDs inability to close above $1.35, now vulnerable to $1.3370. Tokyo traders bought back yen, dragging yen pairs down across the board. NZDJPY eyes 65.15, EURJPY eyes 125.22.
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April 6, 2010 05:38 ET: GBP is the day's weakest currency and JPY is the strongest out of a group of top traded 12 currencies. GBPUSD hits fresh session lows despite the strongest UK construction PMI in over 2 years. PM Gordon Brown is expected to formally call the election on May 6. Mixed opinion polls are said to be the reason behind GBP weakness, specifically an ICM poll in the Guardian showing the Conservatives lead being cut to just 4 points. Other surveys continue to show Conservatives lead at double digits. Technically, cables failure at $1.53 remains prominent, just as EURUSDs inability to close above $1.35, now vulnerable to $1.3370. Tokyo traders bought back yen, dragging yen pairs down across the board. NZDJPY eyes 65.15, EURJPY eyes 125.22.
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By ITMS News on April 6th, 2010 1:26am Eastern Time
The hike was not a surprise to many. The Australian dollar rose 0.15 U.S. cent to 92.04 U.S. cents after the announcement, according to Dow Jones Newswires, although the currency had reached higher levels earlier in the day.
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By InTheMoneyStocks.com on April 5th, 2010 3:31pm Eastern Time
The first quarter of the year started with a broad based rally with new leadership in place. The small cap stocks seemed to take over during the first three months of the year as the market leader. Prior to this time, gold and most commodity stocks lead the markets higher in 2009. Currently, the iShares Russel 2000 Index ETF (NYSE:IWM) which tracks the small cap stocks is higher by nearly 20 percent from the February 5th, 2010 pivot low. The move higher in this index is viewed as a positive according to many traders and investors as they are willing to take on risk.
Since April began many commodity and commodity related stocks are soaring higher after lagging last quarter. Leading energy names such as Exxon Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), and Noble Energy Inc. (NYSE:NBL) are trading sharply higher today.
Commodity stocks such as Cliffs Natural Resources Inc (NYSE:CLF), U.S. Steel Corp. (NYSE:X), and Newmont Mining Corp. (NYSE:NEM) are all at new highs for 2010. These moves to the upside have come even as the U.S. Dollar is flat for the day. Is this a sign of inflation coming back into the market place or just global demand? My guess is that it is inflation at this time.
Regardless if this move in commodity related names is being driven by inflation, China demand, or anything else, inflationary stocks are undeniably trading sharply higher today. However, many of these leading commodity related names are coming into daily chart resistance levels soon, therefore, don't overstay your welcome.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com
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By InTheMoneyStocks.com on April 5th, 2010 1:23pm Eastern Time
Light volume shows how a market can continue to float up without any real backers. Not much institutional involvement continues as markets post another positive day.
SPY has traded just under 63 million shares. On pace as of now for about 100 million in total volume.
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By InTheMoneyStocks.com on April 5th, 2010 12:02pm Eastern Time
Markets did a good old fashioned rinse and repeat type move. Small gap up and then the repeated chug upwards, like we have seen almost each day for the past two months on no volume. As we enter the mid-day session, markets are now going sidways.
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By Nicholas Santiago on April 5th, 2010 12:53pm Eastern Time
The bull rally from the March 2009 lows is now euphoric. It seems that the kitchen sink can be thrown at the market and it will still rise. A little over a year ago if someone sneezed the market would decline and drop sharply. Today it goes up on a daily basis as the market has been down only a handful of trading days since February 5th, 2010. The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) has risen nearly 12 percent in just five short weeks along with the rest of the major indexes.
While the Obama economic team and the Federal Reserve Bank are out declaring victory there are many negatives that are occurring at this time. The first negative that everyone should watch for is the high energy prices that the U.S. consumer will have to pay. The U.S. Oil Fund ETF (NYSE:USO) is trading at it a new 52 week high climbing above it's long sideways base that it has been in since June 2009. When crude climbs usually gasoline follows. The United States Gasoline Fund ETF (NYSE:UGA) is trading at a new high 52 week high as well today. This means there will be higher gasoline prices at the pump for all those that are looking to drive and need to commute. This is a major negative for the markets.
The next important negative news for the stock market will be the 10 Year T-Note yields trading at or above 4.00 percent. When yields have hit or reached this level it has been a negative for the stock market. This has been when the market actually had a correction. Granted there have only been two corrections in the stock market since the rally began in March 2009. Both corrections have been about an 8 percent decline in price and lasted around 4 weeks in time.
High yields will effect the mortgage markets and make it tougher for individuals to refinance or even get a mortgage for a new home buyer. The high yields will also become a negative for the United States Treasury as they will have to pay higher interest on their current debt. The U.S. Debt is around $12.5 trillion and growing everyday. This is a lot of money in interest that must be paid back to bond holders.
Currently at of the time of this writing the market is climbing the wall of worry. Spending programs and entitlement programs are increasing by the minute, however, the market does not care. The Federal Reserve Banks has kept the Fed funds rates at zero percent for well over a year now and the market seems to love it. When the euphoria runs it's course that will be when the market will pay the piper. Until then it's up, up, and away.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com
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By Gareth Soloway on April 5th, 2010 11:40am Eastern Time
JPMorgan Chase & Co. (NYSE:JPM) has been a monster and leader among stocks over the last two months. Since the February 5th, 2010 low was put in, JPM has taken this market higher. The January high was $45.19. As the stock fell into the February 5th pivot, this high became extremely significant for technical investors and traders.
The stock has charged higher, all the way back to that $45.19 level. In the last week, it has crossed it many times intra day but never quite having enough power to close above. This level remains a hardened resistance, though, the continued hammering does weaken it slightly. This is the line in the sand, the master level on a closing basis for the stock.
The markets are trading higher today. Not a very big surprise to anyone as it seems to have that "invisible" hand continues to keep it up with 11,000 on the DOW looming large. Extreme light volume continues.
The leaders today are commodities and commodity stocks. Regardless of the PowerShares DB US Dollar Index Bullish (NYSE:UUP) trading higher, commodities are still strong on last Friday's non farm payrolls data. In addition, globally, growth seems as good as ever. This is creating a demand issue for commodities and driving the prices higher. It will be interesting to see what price oil can go to, before it starts to take its toll on the consumer. Oil is starting to close in on $90 per bbl.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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