Wednesday, March 24, 2010

Morning Briefing for March 24th: Facing Pressure

9:28 AM CT - I've added the top chart to show how we're trading both within the overnight trading range and within the range defined by yesterday's highs and lows. While we've seen pressure on risk assets, the ability of stocks to hold up above yesterday's value area has been impressive. The distribution of NYSE TICK is relatively mixed, contributing to the range trade picture.

We're seeing pressure among risk assets going into today's open, with a weak euro, strong USD, and weak commodity prices. That has weighed on stocks, as we've retraced much of yesterday afternoon's breakout move. Recall that we were in a range market with VWAP around 1162. Selling pressure could not take us below VWAP and we got the breakout move late in the day, taking us to new bull highs across most major indexes. Despite that, we saw fewer stocks register 20-day new highs than last week. Now we're looking to see if stocks can sustain their breakout move or will return to yesterday's value area. Should we see additional pressure on risk assets and relative weakness among small caps and NASDAQ issues, I'd expect the retracement to yesterday's value area and a setting of a fresh trading range.

More later this AM.