U.S. equity markets are
trading higher at the mid-session. This morningâ€™s rally has been
tentative, however, as trader seem somewhat cautious with stock prices
at such lofty levels.
The initial move to the upside was
triggered as the Dollar weakened following a stronger opening. The
strong move in the equity market was being fueled by strong gains from
UPS and Intel. Yesterday, Fed Chairman Bernanke ignited a rally in the
equity markets with his dovish assessment of the economic recovery and
outlook for interest rates. Like it he did several times before,
Todayâ€™s weak Initial Claims Report and weaker than expected Industrial
Production Report sent a signal that interest rates would remain low,
this also helped to contribute to the rally.
Bonds are trading better this morning after a volatile morning. Weaker
than expected U.S. economic reports are helping to contribute to the
strength. T-Bonds broke this morning only to find support at a 50%
price level at 115â€™14. Gains have been limited however, by resistance
at another 50% retracement level at 116â€™15.
June Gold opened
lower because of the stronger Dollar, but has since gained back most of
its loss. Weaker U.S. economic reports are helping to pressure the
Dollar, leading to the turnaround in gold.
The falling Euro put
pressure on June Crude Oil early but it has since gained back most of
its earlier loss. Clearly the direction of the Dollar and the Euro will
dictate the movement of crude oil the rest of the trading session. A
weaker Dollar will indicate more demand for higher risk which will
support a late session rally in crude oil. Technically, this market may
be forming a secondary lower top which could mean the start of a
The June British Pound is trading better
at the mid-session after a report showed the opposition Conservative
Partyâ€™s lead over the Labor Party widened, easing concerns that the May
6th election will produce a hung parliament. Traders had been
pressuring the British Pound lately because of concerns that a hung
parliament would result in a government too weak to tackle the U.K.â€™s
huge budget deficit. Gains could be limited on speculation that bullish
traders will begin to liquidate their long positions ahead of the
Technically, this currency found support following an
early test of an uptrending Gann angle support at 1.5397. Look for this
market to remain firm unless it closes lower. In that case a reversal
top will form indicating the start of a potential short-term correction.
June Euro is down but off its low. Following a sharply lower opening,
the Euro is mounting a small comeback as reports surfaced that the
International Monetary Fund will meet with Greece on Monday to discuss
financial aid options.
Market participants are feeling jittery
again because of concerns over Greece. Investors are worried that the
IMF/EU $61 billion financial aid plan will not be enough to help the
Greek economy and restore confidence in the Euro. At this time, the
Euro is facing serious credibility issues.