By: redliontrader

Around the Globe

Europe as of 6:07am EDT

• DAX (Germany) +1.19%
• FTSE (UK) +0.11%

• Today's Economic News:

Again today, Germany is putting up nice numbers.  UK is a bit of a bother, but some of the more recent numbers have been decent enough to keep us believing in a UK recovery.

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Quote of the Day:
Fear is something to be moved through, not something to be turned from.
–Peter McWilliams

Current Breadth Readings: (click here to see all our breadth charts)

Yesterday we featured the CVI telling us that we were making new highs while down volume was out pacing up volume.  That bearish divergence was erased y'day. Our 40 DPI though did make a bearish divergence in that as we made new index highs, but have fewer stocks trading above their 40 DMA.  This could be a sign of herd thinning, where strong stocks only continue the rally beyond market breadth momentum.

ES SP500 Futures Comments:

Short: 1501
Long:  1481

Flirting with 1500 might delay us just a bit as we are distracted by its roundness and beauty.  What we call a price Siren, luring in the markets.  Breadth is too strong still for this market to go down and we are watching for a thinning of the herd as franchise named stocks will continue to support the index but breadth starts to weaken, a type of breadth divergence.  You will be able to see that with the Dow (small index with a lot of franchise big name stocks) taking over leadership in daily strength against larger indexes like the NYSE.

For today, we think 1501 is the top cap and we are still thinking that there will be plenty of buyers in the 1% area pullback area that is 1481.  We did our first pullback of greater than 0.5% since a week or so, a sign of the bulls strength. That  > 0.5%  was a good sign for the bears showing that they are able to push the ball back just a bit.  The next goal would be a 1% then 3% pushback.   That 3% we think would mark the bottom of a range top in the battle.

US Dollar DX Futures Comments:

Those dollar traders must be going nuts with 6 days of little movement, stuck in the middle with you.  Germany has been putting out some tremendous data and the Spanish flu seems to be contained and getting better. We like the Euro and that puts downside pressure on the dollar.  It is a recovery race and we think Europe might just be taking the momentum from us.  We still like 79.5 before 81.

TLT Twenty Year Bond ETF Comments:

There is a hold on TLT on the 120 region.  We think the 124/118 range is where we will be for a while.  We are bullish here on the TLT up to 124, but that 120 needs to begin holding.

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