Home > Uncategorized > General Update: 2010/03/12: US Equities Lead Push to New Highs, Yet Fixed Income Remains Subdued on Selloff

General Update: 2010/03/12: US Equities Lead Push to New Highs, Yet Fixed Income Remains Subdued on Selloff

▪ As we reviewed key technical decisions facing equities and long-dated fixed income yesterday, we refer you back to our TrendView BRIEF UPDATE (http://bit.ly/dAg1UC) for the full analysis. And in the wake of the March S&P 500 future push to above its previous 1,147 rally high the burden of proof is obviously the bears into today’s US Retail Sales. That is especially so in light of the overnight electronic trade that has also seen the June S&P 500 future push above that previous lead contract high from back in January. While we previously noted that the estimate for the report was already anticipating some weakening from the previous month’s 0.5% gain to just 0.2% on the headline number, we now see that the full range of estimates allows for anything down to -0.2%. As such, it likely takes something worse than that to weigh on the buoyant equities in light of their ability to exhibit so much resilient technical strength.  

▪ As far as the other asset classes are concerned, in spite of the energy markets remaining very strong, April Crude Oil has stalled at the low end of a broad resistance range at 82.20-83.50; if it cannot push through there soon, it may still be topping out. Similarly, and ultimately more tellingly, the April Gold future has weakened off once again to the top of 1100-1090 range interim support; key lower support remains fully $50 below that. That seems counterintuitive if the broader economic momentum is indeed picking up, as the equities would nominally indicate.  All of which points out the significant hostages to fortune which have been left by the equities on their push-up to a new high into today’s US Retail Sales. 

▪ And what we also seem to know for certain in the current environment is that any overt return to weakness in equities would foment swings in other asset classes that includes US Dollar Index revisiting or possibly pushing above its important technical level that was as nearby as .8140-50 (reinforced by major downward channel from the .8963 March 2009 high.) Of course, with equity strong for now it is slipping back to .7950 support. However, there is a recent difference in the tone of its weakness due to degree to which the European currencies have only recovered modestly while the commodity currencies have reasserted their upward momentum. USD/CAD has already slipped back below its previous 1.0480 DOWN Break, and its slide below the previous lows in the 1.0200 area continues its trend in a way that is a mirror image of the equities strength. Yet it is most interesting there as well that weekly MACD has not turned DOWN again as yet…

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