The June E-mini S&P
500 is in a position to post a closing price reversal bottom after
testing a major .618 level at 1101.50. After poking through this level
to reach 1098.75, selling dried up to drive this market off the low.
Most of todayâ€™s downside pressure is being attributed to the
possibility of bank exposure because of the problems in the Euro Zone.
Some traders also believe that the global recovery is going to stall
because of a slow down in demand and credit problems in the Euro Zone.
June E-mini NASDAQ is trying to mount a recovery after testing a major
50% price level at 1856.00. The June E-mini Dow is recovering slightly
after testing its 50% price level at 10378.
June Treasury Bonds
are trading higher in a flight to safety rally. The slow and steady
gain is not reflecting a panic at this time. Regaining the retracement
zone at 122â€™05 to 122â€™23 is encouraging to the bulls, but most likely
precautionary buying rather than speculative buying.
plunged sharply lower as fear subsided a little following the strong
short-covering rally in the Euro. Wednesdayâ€™s close was on the lower
end of a retracement zone at $1203.00 to $1192.00. This indicates that
downside momentum is still strong. Regaining $1203.00 indicates the
start of another rally.
June Crude Oil made a closing price
reversal bottom on Wednesday. A confirmation on Thursday will set up
this market for a 2 to 3 day rally which could trigger a rally to the
retracement zone at 77.53 to 79.80. The supply/demand picture still
remains bleak. This market is likely to take its direction from the
movement in the Euro.
The June Euro is trading higher at the
mid-session after making a surprise reversal bottom earlier in the
session. If conditions remain the same, then look for the Euro to
complete a daily close price reversal which would set up the start of a
possible 2 to 3 day rally to 1.2742.
The weakness this morning
was triggered by yesterdayâ€™s news that Germany was banning naked
short-selling of certain assets. Traders sold the Euro hard as they
speculated that the action by Germany was a sign that there was trouble
in the banking system.
After traders failed to push the Euro
down to what many consider to be the next objective at 1.20, weak
shorts quickly covered driving the market higher. Rumor also helped to
fuel the reversal. Talk was circulating that the Swiss National Bank
was behind the rapid turnaround. The thought was that the SNB grew
tired of selling the Swiss Franc so it decided to buy the Euro instead.
This rumor has not been substantiated. In addition, shorts may have
panicked on the thought that perhaps the European Central Bank was
going to begin a round of intervention on its own.
prices are helping to boost the June Japanese Yen. Traders are selling
higher risk assets and seeking shelter in the lower yielding Japanese
Yen. Last week the Yen made a range of 1.0532 to 1.1375. This range
creates a 50% price level at 1.0954. At this time the Yen feels
comfortable at this balance point on the chart. It also seems to be
taking on the characteristics of a pivot price. A close over this level
The June Canadian Dollar is trading lower
at the mid-session but off its high. Lower demand for higher risk
assets is helping to apply the downside pressure. Based on the range of
.9293 to .9891, the retracement zone at .9592 to .9521 was the downside
target. The low end of this range was penetrated earlier in the session
on strong downside momentum, but a slow down in selling has since
brought the market back above it. This market needs to close under the
50% level at .9592 in order to remain weak. A close under the .618
level at .9521 will put in it in a position to weaken further.