Morning Brief and Today’s Trading Levels

February 23rd, 2010 Posted in Uncategorized

Good morning Traders

The only thing I was off about yesterday's trading was the volatility. What a sleeper! The action happened within the first half hour then blah.

Aside from Consumer Confidence numbers due out at 10:00 EST, retail news and retail earnings were released this morning. TGT beat earnings expectations by 7 cents, yet the response was muted to negative. ICSC said retail sales rose 2.3% month to month and 0.9% year over year. The retail sector is surprisingly strong. Broke or not, Americans know how to shop! Retailers deserve a lot of credit for managing their businesses effectively.

What makes market interpretation and forecasting so difficult is the inverse relationship b/w stocks and commodities and the Dollar. DX H10 has made a monster move from December when it was trading in the $74/75 range. I have a target of $81.68, recent high was $81.48. We could be basing here which could imply a next leg up to near $82.50/83.

Given problems in Europe and their effects on the Euro, this could happen quickly. My guess is before March Quad Witching. Assuming the inverse relationship I mentioned continues, we should see significant Dollar-driven corrections in equities and commodities until they and the Dollar find equilibrium.

Trading Levels

The Tuesday Tank following options expiration is still a solid trend trade. Don't know the of the Tuesday Tank? That's probably b/c I made it up, or at least I think I did and will claim it now.

The Tuesday Tank is what I call the predictable sell off in equities the Tuesday following an up or flat Monday session after an options expiration.

The recent rally looks to have ended. I'll wait for confirmation at the close. Assuming we close at session lows, I expect to see ES H10 and TF H10 retreat to 1065/70 and 595/600 respectively.

Remember despite the recent (low volume) rally, equities are still in a correction.

If you have questions or comments, feel free to contact me directly via email at ruria@manducatrading.com or toll free at 866.312.4965 - Rob.

Daily Pivots	2/22/10
EQUITIES	R2	R1	PIVOT	S1	S2
ES H10	1114.92	1111.33	1107.42	1103.83	1099.92
YM H10	10448.67	10411.33	10381.67	10344.33	10314.67
NQ H10	1839.25	1830.25	1820.25	1811.25	1801.25
TF H10	635.77	633.73	631.37	629.33	626.97
ENERGIES	R2	R1	PIVOT	S1	S2
QM J10	81.14	80.73	80.14	79.73	79.14
QG J10	4.98	4.95	4.90	4.87	4.82