Thursday, March 25, 2010

Morning Briefing for March 25th: Watching a Breakout

9:58 AM CT - With strength in financial shares, but many sectors trading below their opening prices, we're getting a mixed, range performance thus far in the session. The NYSE TICK has been positive on balance, with only one significant selling reading to this point in the day. Volume is running a bit light relative to recent sessions, contributing to the rangy trade. We would need to see a downshift among financial shares and NYSE TICK to sustain a retreat from the morning breakout highs; I'd need to see greater relative strength among small caps to buy into a continuation move to the upside.

We're seeing breakout highs in the ES and NQ futures going into the opening. Note that the Russell 2000 Index, which had been a leader to the upside, is not poised to open at new highs. We're also a decent distance from fresh peaks in the new high/new low indicator. All of that has me looking closely this morning for signs of a false breakout in the day structure, particularly given a lack of bull peaks among other risk assets. Let's see if the small caps can confirm or contradict the early ES strength. More later this AM.