The Hightower Report

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While the stock market seems to have been oversold and expecting very bad economic conditions, the magnitude of the recovery rally yesterday probably sent a message to the bear camp. In addition to the sharp across the board rally in equities, the trade was clearly assisted by much better than expected ISM readings and that seemed to foster some respect for the resiliency of the US economy. However, in order to throw off prevailing concerns of slowing, the equities will probably need to see something positive from the US data again this morning. With an outgoing Fed member suggesting that one should not assume that the Fed is automatically poised to invoke additional stimulus, the market could have been disappointed, but seeing better than expected economic readings has potentially reduced the “need” for assistance from the Federal Reserve. In short, the bull camp would seem to need some additional help from the numbers to add to the very impressive short covering effort that was seen yesterday.

S&P 500: It would appear that the bear tilt was overstated as the magnitude of the rally yesterday seems to highlight a market that was crossed up by the number flow. One gets the sense that the bull camp might only need one positive reading from the flurry of data points this morning, to continue to claim that economic conditions aren’t as bad as previously expected. However, the market is also facing a major number on Friday morning and therefore prices can waffle in either direction, before a more significant economic decision is seen in the wake of the Friday data. For today, the September S&P could use the 1075.00 level as a quasi solid support point, especially if there is anything positive in any of the US numbers this morning.

DOW: The bull camp will suggest that the September Mini Dow managed to regain its 50 day moving average yesterday and that serves to shift the trend back up. However, the bear camp is suggesting that the numbers seen yesterday were an anomaly or that the economy remains very weak regardless of pockets of strength. It does seem as is expectations on the economy were overly negative, as a slightly better than expected 2nd tier economic reading seems to have erased several weeks of mostly negative data flows. While the September Mini Dow did regain its 50 day moving average yesterday, the market only sits at the center of the last two months trading range. Since the market only needs one positive economic report out of the flurry of readings scheduled for release today, it is possible that the bull camp will get some help, which in turn could put prices high enough to see a more pronounced negative reaction to the US Friday numbers.

NASDAQ: Unlike the Mini Dow, the Nasdaq was unable to charge back above its 50 day moving average y and the Index this morning starts the early trade below the 50 day moving average point. However, the market is hopeful of more positive news from the buyout front and perhaps even some ongoing assistance from the tech sector, as several companies continue to be in play from the merger and buy out angle. Some players might even point to favorable Euro zone economic readings overnight as a factor giving the bull camp an initial leg up today. However, given the sharp run up yesterday, it is possible that the bull camp will need some clear cut additional help from the scheduled numbers to solidify a better economic view. Critical support in the September Nasdaq is seen at 1814.00 but we can’t rule out an attempt to extend the rally ahead of the Friday payroll readings.

TODAY’S MARKET IDEAS: We can’t rule an attempt to extend the rise on the charts today, as the market was caught leaning the wrong direction and anything positive from the numbers probably sparks additional short covering buying action. We think that traders should stand back and allow the market another bounce before looking into the purchase of puts, for a hold through the Friday data flows. This week’s reaction was about being too negative toward the economy and the numbers remain soft enough to discourage full a return to the last two months highs.

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The stock market enters the Wednesday trade somewhat oversold but generally seeing weakness from the Asian markets overnight. The trade was presented with a $39 billion BHP offer for Potash, but BHP tempered that offer impact with statements that they would not buy assets regardless of their price. The market might also garner some support from the prospect of a possible bidding war in the US tech sector. The market might also have garnered some lift from a better than expected German Ifo survey that was released overnight. With the added potential for a slightly positive US durable goods report later this morning, and hopes that the US Fed might shore up confidence in a “get together” later this week, it is possible that the bull camp will have some ammunition today to match up against the ongoing flow of double dip recession talk.

S&P 500: International equity markets seem to have regained some footing after general weakness was seen in Asian markets overnight. A favorable German Ifo reading and news of a possible buyout offer in the tech sector might be distracting the market from the double dip recession mentality, that seemed to be gripping the market in the prior trading session. While the markets might quickly return to double dip recession views, in the aftermath of the US Durable Goods report release later this morning, the trade is expecting to see a gain or a positive reading from the scheduled data. In short, one shouldn’t be surprised in the face of a bounce early this morning, but the real test of the bull camp could be the sustainability of the upside tilt. Our pick for a short covering target on the upside is 1055.00 basis the September S&P contract.

DOW: The September Mini Dow contract appears to have carved out a trading range above the even number 10,000 level in the overnight action. Renewed buyout news was seen from a couple different areas of the market overnight and some traders think that type of news might serve to underpin market sentiment today. Expectations for Durables and new home sales generally expect “positive” readings later this morning, but investors should be expected to remain on edge in the face of any scheduled US number release. We would expect the market to show some positive action in the face of the scheduled numbers this morning but we would also expect that optimism to wear off rather quickly and the fear of future slowing to return before the close. In conclusion, a short covering bounce is possible, but we are not sure that the market can expect to fully throw off the bearish tilt unless the numbers are much better than expected this morning.

NASDAQ: News of a possible bidding war for a tech sector asset might provide the Nasdaq with some support today, especially since the market also saw a fresh bid from BHP for Potash. As in the upper end of the market, the Nasdaq bulls really need to see scheduled US data that counters the double dip recession track somewhat, as the slowing fears appear to have become even more entrenched in the face of the massive decline in existing home sales on Tuesday morning. We continue to think that the September Nasdaq is poised for a retest of the 1750 level but the market might see a temporary bounce this morning before resuming the downside track in prices.

TODAY’S MARKET IDEAS: The market can bounce but we seriously doubt the bull camp can engineer anything beyond a temporary technical balancing on the upside. In order to stop the down trend pattern would seem to require a game changing development and without a much stronger than expected Durable goods report result later this morning, we aren’t sure where the market will get something that dramatically improves and entrenches positive macro economic sentiment.

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Fears of softening domestic growth in China and the lack of a positive reaction to the FOMC meeting in the US leaves international stock markets under some pressure overnight. Shanghai stocks were up slightly but Hong Kong was down. The market seemed to “need” good reasons to see a continued uptrend above 3 1/2 month highs but economic data remains sluggish and traders see a slower growth pace out of China as a concern. Tuesday morning’s flow of U.S. economic data did little to relieve the negative tone. In fact, U.S. 2nd quarter productivity showed the first decline in six quarters to post results that were below expectations. Both June Wholesale Inventories and Sales figures came in below expectations and served to add to the already fragile sentiment. The post FOMC meeting comments made note of the recent slowdown in economic data, and that the Fed would use proceeds from maturing mortgage securities to purchase longer term treasuries in an effort to support the economy. While stocks saw a rally on the decision, the market failed to move higher. Many traders see quantitative easing as “pushing on a string” as weak demand for credit has helped keep economic numbers sloppy even with low interest rates and plenty of liquidity. Perhaps news that the House passed the $26 billion state bail-out package helped to add to the bearish tone for the market as funding is coming from increased taxes on multinational companies. US Trade data will be monitored today.

S&P 500: The market spent part of seven trading sessions in a fairly tight consolidation and a surge higher in the US dollar and sluggish growth news from China are seen as negative forces and the market failed to find good reasons to attract new investors. Look for selling resistance today at 1108.50 and 1111.40 for September S&P with 1088.80 and 1082.40 as downside objectives.

DOW: Moving below yesterday’s lows in overnight action could show the sensitivity of the market to the global economic tone. September e-mini Dow futures even took out Friday’s lows overnight. The technical action looks weak and the market looks vulnerable to give back a portion of the solid gains seen since the July lows. Selling resistance for the September e-mini Dow is at 10,550 with 10,403 and 10,315 as next support.

NASDAQ: There were a number of company downgrades from major Wall Street banks, with the most notable a downgraded of Intel’s 2010 growth outlook, and that seemed one of the catalysts that weighed on the tech sector. A build up in PC components at various Asian locations was also seen as a concern and Advanced Micro Devices was also cut from “overweight” to “equal weight” from another bank. Failure to move over Monday’s highs and penetration of the July-August uptrend channel turns the technical picture bearish for September NASDAQ. The market should encounter stiff resistance near 1880.00 today with 1833.60 as downside target.

TODAY’S MARKET IDEAS: The market needed reasons to attract new buyers but economic news is turning a bit more negative and some long liquidation selling appears likely over the short-term. The market may face a period of uncertainty regarding policy, taxes and employment and uncertainty normally sparks selling.

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The stock market has started the Wednesday session out on a weaker footing and in some measures that has resulted in a fresh new low for the move. The US Treasury market continues to price in moderate concern of deflationary slowing and at times the trade is openly tossing around the double dip recession moniker. While the stock market has the capacity to benefit from talk of an extension of quantitative easing, that revelation also seems to have coincided with this weeks high and reversal from the highs. The market did see evidence of a successful “static kill” on the Gulf spill overnight and the market also saw a slight rise in UK regional house price measures, but that news hardly looks to erase the fear of slowing that continues to dominate the US landscape. While the magnitude of US monthly job losses don’t appear to be significant, the equity market has recently been in the vicinity of three month highs and therefore the market appears to be “expensive”.

S&P 500: The bear camp will suggest the S&P is presenting a pattern of lower highs and lower lows, while the bull camp will claim that the market recently became short term overbought and that recent losses were merely technical balancing. However, there doesn’t appear to be much in the way of panic in the current market, as the fears of slowing aren’t fostering high levels of anxiety. Near term downside targeting is seen at 1110.90 and perhaps not until 1109.50.

DOW: While the September Mini Dow didn’t seem to be under noted and aggressive early pressure, prices were hovering around the prior session’s lows in the early going. Given the big range up action seen on the first trading day of August and the temporary high forged last week, the September Mini Dow seems to be facing a decision on holding recent levels, or moving back down to levels that were seen into the end of July. Fortunately for the bull camp, the global equity markets saw record profits at a Pacific based airline, favorable UK House price readings and a rise in Euro zone private sector growth readings. Therefore there are countervailing issues capable of distracting the trade away from the evidence of slowing in the US economy. However, recent action in the market suggests that some longs are banking profits and others are reducing holdings because of the slack economic outlook. Near term downside targeting is seen at 10,527 but a further erosion in prices could be expected into the US Non Farm payroll release later this week.

NASDAQ: The September Nasdaq is showing some initial weakness today but prices have yet to return to the prior session’s lows. Since the Nasdaq appeared to lag behind the rest of the market on the July and August rally, that action might serve to cushion the Nasdaq against broad based profit taking selling. The Indian stock market managed to reach the highest level since February of 2008 overnight but yet that type of optimism looks to be lost on the US market today because of its current track of slowing fears. Near term downside targeting in the September Nasdaq is seen at 1878.00 and perhaps not until 1869.25.

TODAY’S MARKET IDEAS: A lack of optimism toward the economy seems to be providing the bear camp with control over prices. Expect a consistent downside track in prices without much anxiety.

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The stock market enters the Tuesday trade somewhat weak and poised for a move below the prior session’s lows. With the market also managing another new low for the move in the prior trading session, it is clear that the flow of earnings reports is not fully countervailing investor’s fears of slowing in the US economy. We think the market was hopeful that some form of fresh stimulus might be forth coming from Washington but instead the focus is on extending unemployment benefits. In an election year, votes apparently dominate over constructive thinking and therefore the only thing expected from Washington is more inefficient deficit spending. With IBM earnings failing to inspire the bull camp overnight and the trade already bracing for negative news from a US Housing starts and permits report the bear camp should be fairly confident. The bulls really need to see something positive from Goldman earnings or the erosion on the charts will continue to unfold. While upcoming earnings reports could prompt periodic support to stock prices, we seriously doubt the fears of a double dip recession are going to be put down until the Chairman of the Fed attempts some positive cheerleading on Wednesday. Fortunately for the bull camp, we still don’t detect a high level of anxiety in the marketplace, but we also don’t detect much in the way of optimism and that should allow the trend to remain down.

Earnings Reports Today
07/20 Apple, Inc. (AAPL)
07/20 Gilead Sciences, Inc. (GILD)
07/20 Linear Technology (LLTC)
07/20 Allscripts-Misys Healthcare Solutions Inc (MDRX) after close
07/20 Altera Corp. (ALTR) after close
07/20 Seagate Technology (STX) after close
07/20 Yahoo, Inc. (YHOO) after close
07/20 Biogen Idec, Inc. (BIIB) before open
07/20 Goldman Sachs Group, Inc. (GS) before open
07/20 Johnson and Johnson (JNJ) before open
07/20 PepsiCo, Inc. (PEP) before open
07/20 TD Ameritrade Holding Corporation (AMTD) before open

S&P 500: The September S&P in the early action managed to forge another new low for the move and that would seem to suggest that the bear camp saw the earnings reports released after Monday’s close as bearish. Failing to get a lift off IBM earnings has to disappoint a large portion of the market as that company is usually a key bellwether issue. Technically the S&P appears to be poised for a slide to 1040.00 and perhaps even down to 1037.50. Somewhat surprisingly, the markets have continued to shake off potentially unnerving Euro zone events and that suggests that classic slowing fears in the US are the main focal point of many traders.

DOW: Seeing the IBM earnings come and go without a definitive lift in equities prices probably emboldens the bear camp. In fact, with another new low for the move seen overnight in the September Mini Dow, we have to give the bear camp a distinct edge, especially into the US scheduled data flows later this morning. Ultimately we see a downside target in the September Mini Dow down at 9,800 but a higher low around 9,930 could be seen if the housing numbers are mixed or countervailing later this morning. Until the Fed Chairman takes the stand in his semi annual testimony to Congress tomorrow, the headlines are likely to favor the bear camp.

NASDAQ: The Nasdaq appears to have found some value on the charts as it managed to reject a fresh new low for the move in the prior trading session. While IBM earnings didn’t seem to help the broad market overnight, it is possible that some tech sector shares found some supportive information in that earnings report. However, the inability to hold above the 1800 level early this morning could be a key bearish technical signal for many traders. News of slack sales from Texas instruments overnight would seem to give the bear camp an added fundamental edge this morning, especially since general expectations are calling for some type of decline in US housing numbers later this morning. Ultimately we see a downside target in the September Nasdaq down at 1772.00.

TODAY’S MARKET IDEAS: We don’t expect to see aggressive downside action but we do expect prices to consistently work lower again today.

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The stock market looks to be in a liquidation pattern today, as the reward for being long this market continues to be limited by rather limited expectations for future world growth. While the market saw some fresh developments from the Euro zone financial front this morning, the bank stress tests results won’t be made public until July 23rd and therefore the influence of the distribution of the stress test criterion isn’t expected to be a major deal today. However, with the string of US data over the last month clearly pointing to fresh slowing, investors are likely to continue to dump holdings in the face of technical pressure. Even though the Nasdaq and S&P were found to be net spec short in the latest COT figures, the bounce yesterday was probably enough to balance those markets and in turn clear the way for more declines ahead.

S&P 500: Despite the big range down reversal recovery action on Tuesday, the S&P looks to start the new trading session out on a weaker footing. Critical downside support is seen at 1011.00 this morning but a return to the recent lows is likely as the market doesn’t look to have much in the way of a game-changer event directly ahead. In fact, news that BP was potentially poised to get some outside investment capital was mostly discounted this morning and that highlights a market that is focused on the negatives.

DOW: With the Mini Dow retaining a modest net spec long in the last COT report and the market bouncing yesterday that should clear the way for a return back to the sub 9,600 level. In fact, with the jobs market suspect again, the big cap stocks will have to rely on cost cutting and international business just to tread water. Therefore we see mostly risk and little reward for being long. Near term downside targeting is seen at 9,561 and then again down at 9,500, with the market not showing panic and anxiety, but investors in general expected to show a distinct lack of buying interest.

NASDAQ: After a very surprising rally attempt, the September Nasdaq appears to be back on the liquidation ropes again this morning. We see little in the way of support in the September Nasdaq until the 1709.00 level but we doubt that internal positive news flow for the equity is going to be enough to countervail a liquidation attitude in the marketplace. In fact, the market seems to be poised to turn the simple release of the Euro zone bank stress test criterion into a negative and that highlights a market that is looking for the negatives. As suggested before, we don’t see panic and anxiety selling but we do see a continued down trend pattern.

TODAY’S MARKET IDEAS: While there isn’t fear in the marketplace, there also isn’t much in the way of optimism presence in the market talk and that means rewards are expected to be limited while risks seem to be fairly significant.

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While the market is showing initial positive signals this morning, we fear for another dose of negative economic reality from the US scheduled data flows. While the G20 meeting apparently ended with the leaders making nice with each other, we didn’t see anything significantly beneficial from that meeting. We do think that stocks were lifted Friday by favorable news from Oracle, but we don’t see much in the way of important cyclical earnings news due out until Constellation Brands on Thursday. We still don’t expect to see anxiety in the marketplace off the scheduled data, but we do think that the ultra slow readings will send a message to investors, that risk is out of whack relative to reward. In the end, seeing US Treasuries near their highs this morning and seeing gold prices relatively close to their recent highs suggests that the flight to quality mentality is still a front and center item.

S&P 500: The September S&P comes into the action this morning right back to the Friday highs and that would seem to give the bull camp a technical edge to start the session. The next significant resistance level on the charts is seen up at 1080.20 today, but the real test of the bull’s resolve should come in the wake of a very active flow of US scheduled data this morning. Apparently the market has managed to avoid fresh concerning news from the Euro zone again this morning and apparently the market is also discounting the threat of a double dip recession. The Commitments of Traders Futures and Options report as of June 22nd for S&P 500 Stock Index showed Non-Commercial traders were net short 6,883 contracts, a decrease of 4,056 contracts. The Commercial traders were net long 20,718 contracts, an increase of 17,699 contracts. The Non-reportable traders were net short 13,836 contracts, an increase of 21,756 contracts which represents a change from a net long to net short position. Non-Commercial and Non-reportable combined traders held a net short position of 20,719 contracts and that could give the bull camp an initial technical edge.

DOW: While the September Mini Dow comes into the new week sitting close to the prior session’s high, we just don’t see the rational for calling an end to the downward bias that has been in place since June 21st. Certainly strength in European Bank stocks has provided the market with a positive start today, but we think the US scheduled data will generally remove the optimism and restart the downside track again. However, it will take a decline back below the 10,104 level, to give the bear camp the technical edge again. The Commitments of Traders Futures and Options report as of June 22nd for Dow Jones Index $5 showed Non-Commercial traders were net long 3,468 contracts, an increase of 3,297 contracts. The Commercial traders were net short 874 contracts, an increase of 6,820 contracts which represents a change from a net long to net short position. The Non-reportable traders were net short 2,594 contracts, a decrease of 3,523 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 874 contracts. These traders have gone from a net short to a net long position.

NASDAQ: While the Nasdaq starts the new week out on a positive note, we doubt that tilt will remain in control throughout the trading session. Certainly the Nasdaq is emboldened by the Oracle news from last Friday, as that suggests the tech sector is capable of operating in the face of a slowing economy. However, until the September Nasdaq manages a climb back above last Friday’s high of 1856.00, we will remain bearish toward prices. The Commitments of Traders Futures and Options report as of June 22nd for Nasdaq Mini showed Non-Commercial traders were net long 11,737 contracts, an increase of 31,086 contracts which represents a change from a net short to net long position. The Commercial traders were net short 15,303 contracts, a decrease of 26,422 contracts. The Non-reportable traders were net long 3,566 contracts, a decrease of 57,508 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 15,303 contracts. This represents a decrease of 26,422 contracts in the net long position held by these traders.

TODAY’S MARKET IDEAS: The bulls have initial control but the early numbers look to be the main threat to the trade today.

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All things considered, the US equity market has held up extremely well this week. In fact, for the September S&P to be sitting within striking distance of this week’s highs, in the wake of some very disappointing US data is very surprising. With Housing Starts and permits down aggressively and claims showing a rise yesterday, one gets the sense that the early May market debacle did serve to trip up the economy somewhat. On a positive note, the stock market looks set to get through a full week without seeing a patently fresh concerning Euro zone debt problem and that in turn has probably served to provide a measure of short covering buying throughout this week. While we don’t see the resolve to send stock prices sharply higher today, we aren’t sure that the market will see a catalyst to send stock prices into a corrective mode. On the other hand, the markets appear to be sitting just above a series of lows forged early in the week and a trade back below those levels this morning, could give the bear camp a slight technical edge.

S&P 500: The S&P enters the last trading session of the week within close proximity to the recent highs and seemingly in a bullish posture. However, a series of closes earlier this week, just below the current market at 1084.20 in the September S&P contract might be considered a critical inflection point for the trade. In other words, we see relatively tight trading ranges today, but the failure to hold above 1084.20 could prompt a small measure of stop loss selling and perhaps a track back toward the even number 1100.00 level.

DOW: The Mini Dow comes into the Friday trade sitting right on the prior close and just below the recent high. In the wake of mostly disappointing economic data this week we just don’t see the market clawing out another day of strong gains, but with somewhat positive economic readings out of the Euro zone seen overnight and no US scheduled data this morning, the bear camp might not have the resolve to take control away from the bull camp. We see critical close-in support in the September Mini Dow down at 10,352, with even closer support pegged at 10,373.

NASDAQ: The September Nasdaq comes into the action this morning sitting just below the recent highs and seemingly leaning toward the upside. The bull camp will point out that some of the gains earlier this week, came on increased volume and that would seem to give some additional credence to the bull case. Without scheduled data flow today from the US, it is possible that the market will generally waffle around both sides of unchanged.

TODAY’S MARKET IDEAS: A quiet session expected as the US report slate is empty and overnight international economic news was mixed to slightly upbeat. The biggest feature of today’s action might be the fact that the US equity market is partially overbought technically.

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While the S&P did manage to rise above the prior session’s high in the overnight action, the action on the charts isn’t overly impressive. While some equity markets were lifted overnight off rumors of a robust Chinese monthly export tally, that potential optimism was offset by news that Greece GDP was down by 1%. In our opinion, one might have expected the Greece GDP reading to have been down by significantly more than 1%, especially when one considers expectations for a complete disaster in that country. About the best Bernanke could do for the bull camp in comments yesterday, was to suggest that the US looked to avoid a double dip recession. Therefore, one can hardly get “bulled up” on stocks over the dialogue from the Fed, especially since the Fed’s Hoenig reiterated the need to hike interest rates before the end of the year. We continue to think that the longs are facing significant risk, for a fairly limited reward.

S&P 500: While the S&P did manage to rise above the prior session’s high in the overnight action, we don’t see a scheduled event that is expected to cheer investors. In fact, with the US Fed Chairman given a somewhat anemic view on the US economy yesterday, we have to think that most investors will prefer the sidelines given the limited reward potential in the marketplace. We think it will take a close back above 1066.10 in the June S&P to turn the trend back up. Near term downside targeting is seen down at 1047.50.

DOW: The June Mini Dow appears to have forged a quasi double top around the 9,946 level, but technically the Mini Dow has left a pattern of lower highs in place on the charts. We think the market missed an opportunity to rally off statements from the EU on Monday morning and without the prospect of favorable US economic data directly ahead, we just don’t see where the bull camp is going to get a definitive bullish catalyst to drive prices back up. In order to change our opinion on the downtrend status, we need to see two closes back above the 10,000 level. Until the trend is altered, we see little in the way of support until the 9,828 level.

NASDAQ: The June Nasdaq has continued to forge a pattern of lower highs on the charts and that should leave open the prospect of a return to the 1750.00 level in the coming trading sessions. The failure to see a distinctly favorable reaction to recent Apple news and to talk of favorable chip sale patterns overnight suggests to us that even the best sector of the equity market is unwilling to embrace positives and that suggests investors are still more worried about risk than they are of missing an opportunity on the long side.

TODAY’S MARKET IDEAS: Less anxiety today but the view toward the global economy is mixed as growth in China is discounted in the face of lingering uncertainty toward Europe.

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With fresh higher highs for the move and favorable international market action giving the bull camp an added resolve, we have to leave the edge with the bull camp. We suspect that part of the gains in the prior session were the result of seemingly favorable events in the US Gulf of Mexico. However, BP continues to suggest that the final result of the top kill effort won’t be known during the trade today and that could suggest that the market is already pricing in plugging of the leak. With the markets also seemingly downplaying the Euro zone debt contagion issue for most of this week, we would suggest that the bulls are likely to face moderate adversity early next week, if any part of their case falls apart over the long weekend. With the US scheduled to see some favorable Personal Spending and Income numbers this morning, that should leave the bulls with the edge. However, if there is a bump in the road for equities today, it might come in the wake of the consumer sentiment readings, as those readings might be impacted by the early May financial market debacle. We also think that Obama will continue to blast BP again today and in the pattern of this White House, they will probably attempt to use another disaster to push for aggressive reform and increased regulation and that could dent the optimistic tilt in place in the early going today. We also have to think that a number of longs with profits in their positions might be inclined to bank profits ahead of the long weekend, especially given the ongoing concern of problems from the Euro zone.

S&P 500: The June S&P extended its recent pattern of strength early today and we suspect that the scheduled US numbers and window dressing ahead of month end could carry the market even higher. Initial resistance is seen at 1107.00 in the June S&P, with somewhat critical support in the market this morning seen at 1096.60. Minimally favorable numbers might favor the bull camp but we fear temporary corrective action in the wake of the Michigan sentiment numbers and in the wake of any Presidential press conferences from the Gulf later in the day.

DOW: While the June Mini Dow has managed a fresh new high for the move in the early action today, the extension wasn’t significant. Therefore we can’t argue against more upside today, but we think that the bull case has become somewhat over extended. At least in the early hours today, we suspect that more window dressing buying is possible, especially if the June Mini Dow is able to consistently trade above the 10,250 level. Critical support in the June Mini Dow is seen at 10,196 and then again down at an old quasi double top of 10,182. As suggested already, we think that the market will be positive out of the gate, but scheduled data later in the morning and a long weekend ahead might prompt some longs to bank profits just prior to the close today.

NASDAQ: The June Nasdaq has barely managed a fresh new high for the move in the early action today but that probably won’t prevent the market from an upside extension in the wake of the early US numbers. Initial support in the June Nasdaq is seen at 1855.00 this morning with little in the way of resistance seen until the 1874.25 level. News that Apple passed Microsoft to become the largest tech sector company would seem to bring some positive buzz back to the market. In the end, we expect early gains to be followed by a setback from the highs just ahead of the close.

TODAY’S MARKET IDEAS: After a distinctly bullish early tilt we suspect that upside momentum could wane as the session progresses as those long this market might be enticed to bank profits rather than risk negative developments from the Euro zone over the long holiday weekend. In other words, the US market is closed on Monday and that could leave the market exposed to the opening next week.