Tuesday March 23, 2010 - 20:46:59 GMT
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Forex Hound - www.forexhound.com
Buying Slows as June S&P approaches New High for Year
U.S. equity markets are
trading flat to better at the mid-session. Todayâ€™s strength is a bit of
a surprise because of the weakness in the higher risk currencies.
Usually this type of action indicates late session downside pressure is
likely if investors decide to seek protection by in lower yielding
assets. Yesterday the markets showed how resilient they were when they
rebounded from early pressure. Risk of a flare-up of financial problems
in Greece could encourage investors to move money out of higher
yielding stocks and commodities.
There is a small divergence
building which could prove to be a negative influence on stocks. Today
the June E-mini Dow penetrated the recent top at 10757 while the June
E-mini failed to reach last weekâ€™s top. The June E-mini NASDAQ also
failed to penetrate yesterdayâ€™s high at 1052.75.
Bonds are trading flat at the mid-session in light trading. Investors
seem unwilling to take a position until they see this weekâ€™s auction
results. Investors fear that the higher return in the equity markets
will encourage traders to seek higher yields in T-Bonds, thereby
driving down prices. Furthermore, some traders feel that the war of
words between the U.S. Treasury and China over currency valuation will
lead to less demand from the Chinese.
The stronger Dollar is
putting pressure on April Gold at the mid-session. On Monday the main
trend turned to down on the daily chart, signaling weaker markets to
follow. Todayâ€™s action could be short-covering because of oversold
conditions or fresh buyers looking for a collapse in the Euro. Watch
for choppy, two-sided trading while the Dollar tries to establish a
trend. A break through $1088.50 could trigger an acceleration to the
June Crude Oil is trading better despite the strength
in gold and equities. Pressure on equities and commodities late in the
session could lead to weakness in June Crude Oil. Mondayâ€™s sharp rise
in equities triggered a short-covering rally in crude oil after this
market changed the trend to down after a break through 79.77. This
market will remain in a position to break as long as the two tops at
83.70 and 83.80 remain intact.
The Greenback is trading mixed
at the mid-session. The Euro and the British Pound are the two weakest
currencies, down .29% and .37% respectively. The Dollar is trading
better versus commodity-linked currencies.
The March Euro is
trading lower at the mid-session as speculation continues to grow that
Greece Prime Minister Papadreou is likely to leave this weekâ€™s European
Union summit on March 25th and 26th without a financial aid deal. This
means Greece will turn to the International Monetary Fund for aid if
needed. This is negative to the Euro because it makes Europe appear
weak for allowing one of its members to go out of the EU to seek
financial help. Even if Greece gets the money it doesnâ€™t mean instant
success for the Euro.
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