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Global Market Strength Boosts U.S. Stock Indices

James Hyerczyk from ForexHound.com at 12/28/09


Higher global equity markets are helping to boost demand for higher yielding assets, leading to a rise in U.S. stock index futures.  The lack of any significant economic reports is giving traders a free ride to the upside. There is no strong resistance at this time. 


Treasuries are trading lower once again. Demand for higher yielding assets and a weaker Dollar is helping to pressure March Treasury Bonds and March Treasury Notes.  The T-Bonds are trading below a retracement level at 115’08.  Regaining this area could trigger a short-covering rally.


The U.S. Dollar is down overnight, pressured by fresh demand for higher yielding assets.  A boost in global equity markets is the main catalyst behind the fall in the Greenback. Technical factors are also contributing to the Dollar’s weakness.  Overbought conditions are setting up the charts for a meaningful retracement of recent gains.


The March Euro is up overnight.  A new main bottom has been formed at 1.4215.  The chart pattern suggests that upside momentum may be building with a possibility for a rally back to 1.4681 over the near-term.


The March British Pound is appears to be building a small support base.  The lack of fresh negative news has led to the absence of sellers.  Watch for a short-covering rally if 1.6016 is penetrated.


The USD JPY is trading inside of a tight range. Downside momentum is slowing which makes this market vulnerable to a short-term correction.  The daily chart pattern suggests a possible corrective rally to 1.1024 over the near-term.


The old bottom at .9675 appears to be forming short-term resistance for the March Swiss Franc.  If this resistance fails, this market could accelerate to the upside.  The current pattern suggests a rally to .9806 is possible over the near-term.


The March Canadian Dollar is rallying overnight.  Currently this market is holding a resistance level at .9574.  A break through this level could trigger a test of a recent main top at .9609. 


February Gold is mounting a comeback overnight.  The weaker Dollar and oversold conditions are the driving forces behind this strength.  Regaining an old 50% level at $1107.40 is a sign of strength.  The current chart pattern suggests a rally to $1151.30 is possible over the short-run.


The main trend turned up on the daily March Crude Oil chart last week.  This has led to a surge to the upside.  The rally overnight stopped just short of a retracement level at 79.27.  A breakout over this level means a challenge of the last major top at 81.52.  Near-term support moves up to 77.99.

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