U.S. stock indices sold
off as fear swept through the markets. News that Greeceâ€™s budget
problems could escalate sent traders into the Dollar and out of higher
risk assets. Lower than expected U.S. economic reports also contributed
to the weakness as traders liquidated positions in anticipation of a
slowdown in the economy. All three major indices are currently trading
inside of retracement zones. So what may appear as panic selling to
some could actually be a normal retracement.
The March E-mini
S&P 500 has formed a range between 1148.00 to 1078.50. This makes
1113.25 to 1121.50 a potential upside target. The charts are also
indicating a possible rally to 1842.00 to 1855.50 in the March E-mini
NASDAQ and to 10371 to 10445 in the March E-mini Dow.
the near panic selling in the stock indices and an increase in demand
for safety, pressure remains on the March Treasury Bonds and March
Treasury Notes. This could mean that the stock break was emotional.
Yesterdayâ€™s Fed report signals that it is getting closer to hiking
interest rates. The news that the Fed is going to end its quantitative
easing program on schedule at the end of March could put upside
pressure on yields. Tuesdayâ€™s closing price reversal top which started
inside a major retracement zone is helping to pressure the March Bonds.
All indications are for a possible break back to 116â€™06.
Gold has had a volatile day. Overnight the market dipped lower, but
then failed in an attempt to rally as the Dollar began to strengthen
shortly after the opening. The trend is up in the Dollar which should
keep pressure on gold, although oversold conditions make this market
ripe for a short-covering rally back to $1119.10. A break under
$1075.20 could trigger an acceleration to the downside. The bigger
picture indicates that this market could collapse another $50 to $100
if speculators decide to liquidate positions.
March Crude Oil
found support overnight ahead of the December bottom at 72.53. The test
of this price encouraged shorts to cover positions while attracting
bottom pickers. The fundamentals are still bearish because of low
demand and higher inventories. Renewed interest in higher risk assets
could trigger a short-covering rally however. The charts indicate there
is plenty of room to the upside with 78.99 a potential upside target.
trading relatively flat in the hours before the New York opening, the
U.S. Dollar strengthened as sentiment shifted back toward safety. Late
yesterday and overnight, the Dollar appeared to be ready to weaken as
demand for higher risk assets began to pick up.
Early in the
trading session, news began to leak about Greece debt concerns causing
the U.S. stock market to sell sold off. The release of less than
stellar U.S. economic reports triggered additional selling pressure as
investors pared equity market positions in anticipation of an economic
slowdown. This rattled traders who then began selling higher price
assets while seeking safety in the U.S. Dollar.
The March Euro
continued to weaken throughout the session while taking out sell stops
under the psychological 1.40 level. Todayâ€™s selling pressure has been
triggered by news that Greeceâ€™s budget woes have resurfaced. For
several days, traders had become complacent while under the belief that
a new bond issuance would make the Greek debt problems go away. 1.3800
remains the most likely downside target.
The British Pound is
trading lower but remains inside of its five day range. Itâ€™s hard to
tell at this time which direction investors prefer. Fear, and demand
for lower risk is likely to drive the market lower.
safer assets helped the March Japanese Yen turn lower. Early in the
session, the Dollar was rallying versus the Yen after completing a 50%
retracement and a closing price reversal top. A sell-off in U.S. equity
markets, however, sent traders scrambling for safety, sending the
Japanese Yen higher.
Oversold conditions and profit-taking helped
to underpin the March Canadian Dollar early but the sell-off in U.S.
equity markets changed risk sentiment, triggering an intraday reversal.
Look for the Canadian Dollar to feel pressure as long as investors
continue to shun risk. Lower crude oil and gold are also contributing
to the strength in the USD CAD.
The March Swiss Franc held could
not shake earlier losses after an overnight break took this market
through the December low at .9522. A new main top has been formed at
.9647. This market is rapidly approaching oversold status and could
begin a correction at any time. Watch for a closing price reversal to
signal the formation of a bottom. This pattern is unlikely to occur
today unless risk sentiment shifts away from safety.