Tuesday, February 02, 2010

Morning Briefing for February 2nd: Continued Strength

8:02 AM CT - I added the top Market Delta chart to show how we're trading going into the open for the ES futures. We're seeing a negative Cumulative Delta and, after early strength, the index has moved back below its volume-weighted average price (VWAP; red line). This sets up near term resistance at 1089-1091, with near term support at the overnight lows around 1082. I'll be updating Cumulative Delta during morning trade to handicap how we'll trade relative to this range.

As I'm writing, the ES futures (above) are breaking nicely above their Monday highs, continuing the strength that we saw with solid institutional buying. Interestingly, Monday's volume was tepid compared to that seen during the recent decline, but the volume was very skewed toward the buyers--and that usually sets the short-term stage.

Note also that intermarket themes are largely in gear, with rates and commodities higher in premarket trading. These are an excellent tell for a general interest in risk assets: a desire to own stocks and commodities and a move away from safe fixed income.

I'll be updating this briefing as we get closer to the market open; stay tuned.