Monday, March 15, 2010

Morning Briefing for March 15th: Looking to the Downside

Recent posts have focused on the recent loss of upside momentum in stocks following a run to new bull highs. Such weak momentum frequently precedes a short-term reversal, and we can see that the market has been following that script this morning. The inability to sustain price above the overnight highs targeted the overnight lows as a short-term move and candidate downside breakout. Weakness in oil and currencies vs. USD is contributing to the retreat in risk assets. We have important support in the 1134 area in the ES futures; we should not revisit the overnight range if what we're seeing is a valid downside break.