Re-cap of the US Stock Market Action for the session ending 7 April 2010

US stocks fell late in the day Wednesday after a Federal Reserve official said interest rates should not stay low for much longer, thus giving some investors an excuse to take some gains off of the table as the Bull rested.

The DJIA dipped 72.47 pts, or 0.66%, to close at 10,897.52, the S&P 500 dropped 6.99 pts, or 0.59%, to close at 1,182.45, the NAS tallied up a minus 5.65 pts, or 0.23%, to end the session at 2,431.16.

Federal Reserve Chairman Ben Bernanke said the US economy still faces significant headwinds, suggesting again that he is in no rush to raise interest rates.

In contrast, Kansas City Federal Reserve Bank President Thomas Hoenig said keeping interest rates too low for too long would encourage risky financial behavior.

IMO, the market is a bit overbought in here as it approaches the Key resistance level of 11,000 and Mr. Hoenig’s remarks were an excuse for the Bull to pause to refresh in here.

The CBOE Volatility Index .VIX, Wall Street’s fear gauge, gained 2.4% after closing Tuesday at a 30 month low. Despite the gain, the VIX remains at low levels, suggesting little fear among investors.

Stocks gained some ground in the early afternoon after strong demand at a US$21B Treasury auction of 10-year notes, but the momentum was short-lived. Markets face a US$13B 30 year bond sale today.

A stronger USD also slowed some buying in the early going the Dollar Index climbed to a gain of 0.4% before it pulled back to settle with a gain of 0.2%. Most of the Greenback’s strength was down to the Euro, which weakened in the wake of news that EuroZone economic activity was flat in Q-4 Y 2009.

Precious metals were unfazed by the USD, though, and Gold prices climbed 1.5% to US$1137 oz, and Silver prices settled 1.5% higher at US$18.20 oz.

Strength among precious metals plays helped offset the weakness of Monsanto within the materials sector, which fell 0.7%, as Monsanto posted an earnings miss and confirmed a tepid forecast.

Advancing Sectors: (None)

Declining Sectors: Telecom (-2.3%), Energy (-1.0%), Utilities (-0.9%), Materials (-0.7%), Industrials (-0.6%), Financials (-0.5%), Consumer Discretionary (-0.5%), Consumer Staples (-0.5%), Health Care (-0.4%), Tech (-0.2%)

Volume and Breadth: About 9.63B/shrs traded on the NYSE, the AMEX and NAS, in line with last year’s estimated daily average of 9.65b/shrs. Decliners outnumbered advancers on the NYSE by 2 to 1, and on the NAS, about 5 stocks fell for each 4 that rose.

Gold Focus Report

Gold at US$1,500 by Year-End

Gold rallied for a 5th day running despite weakness in the Euro and the energies. The benchmark contract jumped +1.5% and settled at US$1153 oz, the highest close since December 2009. Recent strength in the Yellow metal is impressive. Research showed that Gold failed to advance strongly during Argentina’s credit default in Y 2001.

However, Gold has shown resilience during Greece’s financial crisis. As Greece is a member of the EuroZone, its deficit problem particularly pressures the Euro.

Nevertheless, the selloff in Euro has not caused Gold to decline hard. Rather, the Gold price in EUR terms reached a record high. A further rise remains in favor as long as 1123.5, the minor support holds targeting a retest of 1145.8 the next resistance.

On the Downside: a break below 1123.5 will indicate that a short term top has formed and should bring some lengthier consolidation before staging another rally.

The Big Picture: price actions from 1227.5 are treated as correction to rise from 931.3 only, no doubt. the lack of impulsive structure of rise from 1044.5 augurs that it is possibly part of consolidation from 1227.5, rather than resumption of the long term up-trend. A move above 1145.8 will bring retest of 1227.5 high but upside will likely be limited there and bring at least one more fall before the consolidation concludes.

On the Downside: a move below the 1084.8 support will shift favors to the case that correction from 1227.5 is developing into a 3 wave move with another low below 1044.5. Stay tuned…

Stocks to Watch Today

Barrick Gold Corporation (ABX), Broadcom Corporation (BRCM) First Look, Cisco Systems, Inc. (CSCO), and Intel Corporation (INTC).

Read full report below:

Posted by Shayne Heffernan on Apr 8th, 2010and filed underLatest News, Oil, USA.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site