By Gareth Soloway on March 31st, 2010 1:57pm Eastern Time
The markets started out on a wild note today after the ADP Private Sector Employment Data was released. It showed a loss in private sector jobs last month. There was a minor gap down, then a hard sell, as the markets found themselves at gap fill, going back to last Friday. However, that did not last long. Light volume is king on a holiday shortened weak and it did not disappoint. By 10:00am ET, the markets started to move higher and by mid day, were on the flat line. Since that point, the markets have stayed there, barely moving. Volume is almost non existent.
Looking across Wall Street, there is little to discuss. Everyone is waiting for the Friday Non Farm Payrolls and Unemployment Rate. That will be given to the markets at 8:30am ET. Just a reminder, the markets are closed.
Stocks are mostly along the flat line. The one stock of note is Research In Motion Limited (NASDAQ:RIMM). They are set to report earnings after the close today. The stock is trading flat as of now.
Financial stocks are showing a mixed bag today with JPMorgan Chase & Co. (NYSE:JPM) inching higher while Goldman Sachs Group, Inc. (NYSE:GS) moves lower.
Oil and gold are having fantastic days on the back of a thrashing to the dollar. It looks like some buyers are picking up the Euro or maybe even some short covering. Either way, the Euro is higher and the dollar is sharply lower. The United States Oil Fund LP (ETF) (NYSE:USO) is higher by 1.20% on the day while the SPDR Gold Trust (ETF) (NYSE:GLD) is up by 1.00%. Overall, stocks you might think would be higher on a weaker dollar and a rise in oil are not. Exxon Mobil Corporation (NYSE:XOM) is just hovering around the flat line.
The markets are doing exactly what I thought they would. Without volume, we all know that the markets get a lift. Today is not different. If volume gets even lighter, it is possible that the markets could even close positive on the day. To get more in depth analysis, guidance, swing trades and education, join the Research Center now! A new swing trade was posted just minutes ago. The last swing trade post, gave at 25% return in one day.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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The unexpected 23K decline in ADP is weighing on USD across the board, while the retreat in stocks is boosting JPY (dragging down yen crosses). $1.3550 in EURUSD remains the required break for the week in order for the rebound to ensue. Profit-taking at the last day of the quarter throughout Europe could also accelerate US losses but the more downside should take place in the event of actual net loss in March NFP. US crude still unable to regain $83.00, while gold has to close the day above $1117 to garner further upward action towards $1127.
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By TRADER X on March 31st, 2010 10:46am Eastern Time
When the U.S. Dollar index declines the entire market rallies. The dollar has sold off sharply over the past two days and this has kept the markets buoyant. We can listen to all the reports in the world and there are only two factors that really matter. The first is the U.S. Dollar reaction once the NYSE opens and the second factor is the 10 Year T-note yield. Other than that the market does not care about anything else. Watch the stock indexes if the dollar catches a bid higher.
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 InTheMoneyStocks.com on March 31st, 2010 12:06pm Eastern Time
The SPDR S&P 500 ETF (NYSE:SPY) key levels work so well, it almost seems like a dream. Note the gap down on the SPY at the blue trend line which is support. This line happens to be the low from not only yesterday, but the day before as well. It does not take a genius to scalp that level to the long side. Sure enough, a large pop occurs on the first candle of the day. ITMS traders take profits. The markets sell, dropping sharply to the downside all the way to Chief Market Strategist Gareth Soloway's master trend line and gap fill at $116.65. Longs are taken again and the profits roll in. The markets soar all the way into the slanted yellow trend line which played a key role in keeping the markets up yesterday. At this point, profits taken and the markets can be shorted for a pullback. Sure enough, the markets pullback right into the blue trend line. Bamm! Another profit. Then the markets rip higher again, into gap fill, the green trend line. This just happened and traders are already in the money on that short. Knowing the levels on the charts means profits and winners. Simple as that. Learn it, Live it, Profit!
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By InTheMoneyStocks on March 31st, 2010 9:28am Eastern Time
The U.S. Dollar index has declined sharply overnight. Normally when the dollar is lower to start the morning the stock index futures will be higher. This is not the case this morning as the stock index futures turned south after the ADP jobs report was below expectations. Generally a weak dollar will benefit the stock market by lifting most commodity and inflationary stocks. Therefore, if the dollar remains weak the downside today could be limited.
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Todays March ADP rport (12:30 GMT) is an appetiser for what could be the first net creation of US jobs since December 2007, expected to show arise of 40K in March from -20K in February. Signs of improved US labour markets were seen in yesterday's consumer confidence, whose perceptions index (jobs plentiful minus jobs hard to get) reached the best level since August 2009. EURUSD weighed by concerns with Greece reopening of its 12-year bond as well as falling Asian equities. What was a resistance of $1.3550 is now prelimin ceiling at $1.3470, with downside target standing at $1.3320. AUDNZD shows gradual descent in its daily chart, suggesting 1.2810, followed by 1.2770.
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By Nicholas Santiago on March 30th, 2010 3:44pm Eastern Time
Much like everything else since February 5th, 2010 the Dow Jones Transportation average has rallied to new highs for the year. Transport stocks are a leading indicator because they include shipping by air, sea, and ground. When the transport stocks are rallying many traders believe that growth is taking place again and this is a positive for the major indexes.
Some leading transport stocks that have traded to new highs are the airlines. Companies such as Delta Airlines inc (NYSE:DAL), AMR Corp (NYSE:AMR), and UAL Corp (NASDAQ:UAUA) have all made new highs for the year and have really lead the transportation index higher. This can be viewed as a positive for the overall stock market. Package delivery airlines are also at new highs. Companies such as Federal Express Corp (NYSE:FDX), and United Parcels Service (NYSE:UPS) still look good on the charts and continue to trade higher. This is also a positive for the markets.
Here is the negative for the transport index and the overall markets. The trucking stocks and the shipping stocks continue to lag and many traders believe that these are the more important transportation stocks that should be leading the markets higher. Stocks such as Ryder Systems Inc (NYSE:R) topped out in October 2009 and currently still remains well below that high. Meanwhile YRCW Worldwide Inc (NASDAQ:YRCW) fights for it's corporate survival by trading at 0.54 cents a share today. The stock traded over $6.00 dollars in September 2009. Trucking has clearly not been a positive for this market.
Dry bulk shipping stocks have also been a negative for the markets. A couple of these leading names are well below their 2009 highs. The first leading stock that is lagging is Dryships Inc (NASDAQ:DRYS). This stock topped out in September around $8.00 and now trades at $5.90 a share. The second lagging dry bulk shipping name is Excel Maritime Carriers Ltd (NYSE:EXM). This stock topped out in July 2009 at nearly 10.00 a share. The stock is currently trading at $6.19 a share which is well below it's 2009 high. These two leading names are very negative for the major indexes.
As long as the Dow Jones Transportation Index (NYSE:IYT) is holding steady and near new highs everything is fine. If the airlines start to decline this is the signal that the overall market could be turning. There are still a lot of pockets of weakness in the transports and today I have pointed out a few of them. Watch the leaders as they usually will tell the tale.
Nicholas Santiago
Chief Market Strategist
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Yield differentials, LIBOR developments and the failure in the CRB and Crude Oil continue to boost USD
Note: This article contains image(s)
The impact of interest rate differentials on FX is highlighted by the fact that the correlation between EURUSD and GE-US 10-year yields is now at +0.90, the highest since June 2007. Global bond yields may be rising across the board but the 10-year yield differential between Germany and the US continues to deteriorate for Germany, hitting 3-year lows at 0.73%. These increasingly meaningful differentials will continue to influence FX markets especially after JC Trichet indicated the ECB will extend its emergency collateral rules beyond 2010, while the Fed will conclude its MBS purchases next week. The yield differential story continues to favour the US dollar from both a short and long-term perspective. Aside from the 10-year yield differentials, EUR 3-month LIBOR hits fresh record low at 0.58% while USD 3-month LIBOR advances to its highest since September 2009.
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By InTheMoneyStocks.com on March 30th, 2010 1:28pm Eastern Time
Since October 2008, the U.S. government has been spending a lot of money, most of which it currently does not have. Simply put, to keep the economy going the government has borrowed from other nations and from the Federal Reserve Bank. The major foreign debt holders are China, Japan, and Brazil. The capital borrowed from the Federal Reserve Bank is simply printed. The national debt for the United States is now estimated to be over $12 trillion dollars. I repeat $12 trillion dollars!
What is the amount of interest that must be paid back on this borrowed money? What will happen if the 10 Year T-note yields go to 5.00 – 6.00 %? How can the U.S possibly service the interest on this debt? Forget about paying off the principle on this debt, that simply cannot happen in the next 50 years.
Spending by the past administration was completely out of control in the United States throughout 2001-2008. However, this current administration is not any different than the last one. The last time I checked a household could not spend their way into saving money. Countless stimulus and entitlement programs from the government continue to unfold on a daily basis. Therefore, the U.S. debt only seems to increase.
At this time the stock market loves what is going on. The market seems to float higher everyday, and every dip is a buying opportunity. Leading stocks such as Apple Inc (NASDAQ:AAPL), Cliffs Natural Resources Inc (NYSE:CLF), and Potash Corp (NYSE:POT) are certainly trading higher and signaling all is well, for now. However, at some point the party will end just as it did in 2007. When the party does end and the music stops, this time around has the potential to be worse than the last crisis.
Source: usdebtclock.org
Nicholas Santiago,
Chief Market Strategist
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