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Aquaculture and Soybean Demand

by Dave Hightower on April 16, 2012

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Aquaculture is the farming of aquatic organisms such as fish, mollusks, crustaceans and aquatic plants. Growing populations around the world have put added strain on the demand for protein, and that has fueled a significant increase in aquaculture production (up 72% from 2000 to 2009 according to the FAO). Aquaculture is viewed as a more efficient way of producing proteins than traditional land-based meat production. A study conducted last year showed that 100 pounds of feed will yield 65 pounds of farmed salmon but only 20 pounds of chicken and 13 pounds of pork.

Listed below are some facts about the aquaculture industry and its potential impact on the global soybean market:

China generated 62.5% of world aquaculture production of fish, crustaceans and mollusks in 2009 (34.8 million tonnes). Other major producers include India, Vietnam, Indonesia and Thailand.
Fishmeal is more efficient as a protein source for aquaculture than plant-based proteins. (Carnivorous fish are not accustomed to plant-based feed.) Progress has been made on the plant end, but feed rations still require 15-30% fishmeal.
Expansion of global aquaculture could use 70% of the global fishmeal supply by 2015. Global fishmeal output has been running around 6-7 million metric tons per year for the last ten years. Average global trade has been running 3-4 million tons per year.
China is by far the greatest consumer of fishmeal, ranging between 1.6 and 2 million metric tons annually. Japan and Thailand follow with 700,000 and 400,000 metric tons per year, respectively.
While some decline in fishmeal output can be blamed on overfishing, most of the variations have been attributed to the presence of El Nino.
The apparent limitations to fishmeal output leaves the potential growth in the aquaculture sector dependent on alternative feed sources, such as soybean meal, and on the ability to develop plant-based feeds that are efficient for aquaculture production.
The protein content in fishmeal is estimated at 65% versus 48% for soybean meal.
World soybean meal production in 2009/2010 was 165 million tons, which was about 25 times greater than global fishmeal production.
The expansion of China’s swine, poultry and aquaculture sectors has been the driving force behind China’s importing of soybeans. The Iowa Soybean Association estimates that China’s aquaculture sector consumes 5 million metric tons of soybean meal or the equivalent of 235 million bushels of soybeans.

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Sources: Food and Agricultures Organization of the United Nations (FAO), USDA, Iowa Soybean Association.

Metals: Higher Equities & Weaker Gold Leaves Metals Prices off Balance

by Dave Hightower on April 10, 2012

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

OUTSIDE MARKET DEVELOPMENTS: Asian equity markets were mixed overnight, with the markets surprised by a positive Chinese Trade surplus reading. Apparently a pick-up in overseas demand countervailed slack domestic demand in China. The European markets were still generally off balance, because of last week’s soft US payroll report and also because of residual slowing fears in China, in the wake of their monthly trade balance figures that showed a softening of domestic demand. From the US scheduled report front today, the market will see weekly private US chain store sales figures, US Wholesale trade and a flurry of Fed speeches throughout the trading session. Also due out today are the results of a US 3 Year Note auction at mid day and traders will also see a World Ag Supply and Demand estimate report which in turn could have some indirect impact on metals and other physical commodity prices.

GOLD: While there continues to be hope that either China or the US will step up and provide some additional economic stimulus, that issue isn’t thought to be a front burner potential in the coming session. While some traders continue to fear periodic threats of global slowing and that in turn has periodically pulled support from under physical commodities like gold, there is hope that last Friday’s numbers has already caught the Feds attention. With four straight sessions of lower global equity market action, the global slowing threat was accentuated and that probably increases the attention on upcoming Fed dialogue. However, today the US equities look to break the recent trend of weaker equity market action, but that potential supportive outside market action might be tested, if a series of US Fed speeches today, fails to produce some dovish policy dialogue. In other words, many markets like gold will be parsing the Fed’s commentary today, in search of a softening in the Fed’s somewhat hawkish tone, that initially surfaced in the last FOMC meeting minutes release. Another development that might limit the upside in gold prices today, is news that Chinese gold production for the month of February rose by 11% over the prior month. However, that potential negative is probably countervailed by ongoing ideas that Chinese gold demand, has generally continued to grow and that growth is expected to soak up the added domestic gold supply. Comex Gold Stocks were 11.148 million ounces down 168,787 ounces. Gold stocks have declined 13 of the last 20 days.

SILVER: While the May silver contract attempted some upside action overnight, it generally remained well within the prior session’s trading range and that would seem to suggest the silver trade is in need of fresh guidance from the Fed, or from the US equity markets. Unlike gold, silver has been unable to forge a recent pattern of higher highs and higher lows and that in turn would seem to suggest that silver isn’t as upbeat on the potential for additional US easing as if a portion of the gold trade. With recent noted weakness in copper prices, it is also possible that silver is tracking with the industrial metals sector and that would explain a portion of the recent divergence between gold and silver prices. Therefore silver might take some direction from earnings news from Alcoa later today, as the fear of global slowing and more specifically the fear of slackening physical demand for commodities, has been a focal point for silver and copper traders this week. In a partially concerning development, the silver market continued to see a rise in silver exchange stocks, with Comex Silver Stocks yesterday afternoon, rising to 140.059 million ounces, with a single day gain of 539,505 ounces. Comex Silver Stocks are now at the highest level since 08/06/2008. Silver stocks have increased in 13 of the last 20 days. Silver looks to take most of its direction today from classic physical commodity market factors, but the action in the US equity market might have some influence on silver prices today.

PLATINUM: While July platinum initially managed a range up probe overnight, that track has been clearly reversed and the Monday low has already been taken out. Some traders were pointing to a minor gap area on the charts down at $1,611.30 to $1,611.20 as a necessary downside target. Other traders are pointing to a somewhat definitive pattern of lower highs and lower lows on the charts since the late February high, as a sign of a downtrend pattern. Therefore July platinum might be headed back to the recent low of $1,590.20 unless the macro economic outlook improves quickly and or the US Fed dialogue today hints at some fresh near term assistance for the US economy.

Bonds: All About the Payroll Data; Shorted Session Could Add Volatility

by Dave Hightower on April 6, 2012

At least in the early action today US Treasuries were showing some minor weakness and that was partly the result of an overdone reaction in the prior trading session and that could also have been the result of position squaring ahead of the US Non farm payroll report later this morning. With a partially holiday thinned trade to start and a shorter trading session, one might expect the report to compact activity and in turn that could enhance the initial reaction to the release. While US equities were showing some minimally positive action in the early Friday US morning trade that action came on the heels of slightly weaker market action in Asia. In fact, the Nikkei was weaker again overnight and that market ended up posting the worst week since last August. Despite the holiday in Europe, there would appear to be ongoing concern toward the Euro zone, as rising yields in Spain and Italy have increased concerns that the LTRO impact has worn off. However, the European influence probably won’t be significant today, as the focus of the market today will be almost exclusively trained on the US Non farm payroll results. Expectations call for a +200,000 Non farm payroll gain, with most economists predicting no change in the unemployment rate. Some analysts wonder if a Non farm payroll reading of only +200,000 will be good enough, to convince the marketplace that the US recovery is strong enough, to self propagate, especially since the US Fed recently seems to have moved to the sidelines. In fact, some economists think that an average 200,000 monthly non farm payroll reading gain might not be enough to offset natural attrition. While the market will also see a Consumer Credit reading later today and expectations call for a rather noted jump in that reading, in excess of 10 billion, that report impact might be lost in the shuffle of the early closes and the long weekend. While the payrolls will dominate the trade, it could take a number moderately away from expectations to completely distract the market from it recent return to European debt concerns. While the markets don’t seem to be attaching significance to the potential for unrest and political change in China, some news outlets overnight carried a story that the Chinese government military newspaper was instructing troops to ignore rumors on the internet and in turn that they should follow party direction. While the recent coup attempt was largely discounted as a one off change of positioning among the upper ranks of Chinese leadership, that situation was joined by violent protests against the Chinese company that manufactures Apple components and that in turn has supposed uncovered factory worker dissatisfaction. In other words, it is possible that China’s 165 million manufacturing workers might be poised to push for higher wages and improved working conditions and that in turn might prompt China to give in and allow a larger measure of inflation in its economy. In the mean time, the situation in China is probably only a very minor bullish influence on Treasuries but the focus of the trade will probably mostly remain on the pace of the US economy.

Sugar: Weak Thailand Cash Concerns Bulls

by Dave Hightower on April 4, 2012

The market looks vulnerable to further long liquidation selling from speculators. Outside market forces look negative for today and fund traders still hold a very large net long position in sugar. The technical pattern is turning more negative and longs face the outlook for improving supply just ahead as the Brazil harvest will begin soon. There seems to be plenty of exportable surplus sugar in the meantime as Thailand is working through their second record production season in a row. May sugar closed moderately lower on the session yesterday and experienced the lowest close since March 13th. Another weak close in London sugar yesterday, ideas that there is plenty of sugar available to fulfill short-term needs on the world market due to Thailand and India offers and talk that supply will be on the rise in the weeks and months just ahead when Brazil harvest gets underway helped to pressure. In addition, there is talk that speculative long liquidation selling is picking up steam with the recent more negative technical action. As of March 27th, trend-following fund traders were still net long nearly 83,000 contracts and this suggests increased long liquidation selling if support levels are violated.

TODAY’S GUIDANCE: The weak Thailand cash basis is a concern for the supply bulls as buyers are beginning to see less and less reason for the premium of May to July and October contracts. A bounce to 24.49 for May sugar looks like a selling opportunity.

TODAY’S MARKET IDEAS: The technical action remains bearish with May sugar resistance now at 24.44 and 24.52 with 23.76 and 23.20 as next downside targets. A close under 24.22 turns the chart pattern more negative.

Recovery Pace May not Be As Fast as Hope; USDA Report Today

by Dave Hightower on March 30, 2012

Recovery pace may not be a fast a originally hoped, but is moving forward. Grains may have hit their season lows.

Energy: Yesterday’s EIA Report and Possible SPR Release Weighs on the Market

by Dave Hightower on March 29, 2012

May crude oil prices came under selling pressure during the early morning hours, reversing from a challenge of the overnight high ($105.70). This sets the crude oil market up for a challenge of yesterday’s low of $104.67. The outside market tone has taken a negative track overnight, with more weakness in Asian and European equity markets and slight gains in the US dollar. It appears that global markets have responded to yesterday’s disappointing US Durable Goods report that pointed to a pullback in manufacturing activity and raised doubts over first-quarter growth prospects. It also seems that there are a number of forces trying to talk the crude oil market down, including fresh comments out of France, suggesting that they were working in cooperation with US and UK officials on a potential strategic petroleum reserve release. Saudi Arabia’s oil minister also tried to talk the market down in an op-ed piece in the financial Times, suggesting that current prices are too high and do not justify the supply and demand factors of the market. A third negative for the crude oil market comes following yesterday’s EIA inventory data that showed a much larger than expected build. EIA crude stocks rose by 7.1 million barrels. It is possible that some of the larger than anticipated build came from a jump in Gulf coast stocks, perhaps in response to recent transportation delays through the Houston Ship Channel. EIA crude stocks are 2.322 million barrels below year ago levels but 9.147 million barrels above the five year average. Some traders viewed the jump in crude oil imports last week to a pace of 9.269 million barrels per day, compared to 8.224 million barrels the previous week, as a slight negative to crude oil prices. The refinery operating rate was up 2.3% to 84.5%, compared to 84.10% last year and the five year average of 83.56%. It appears that May crude oil prices are on track to challenge the bottom of the recent trading range at $104.50-$104.29. The short-term trend in crude oil favors the bear camp, with resistance at $107.73, then $108.70.

GASOLINE: May RBOB prices registered a higher high during the early morning hours and spent most of the session in positive territory. US gasoline prices appear to be dancing to their own tune after yesterday’s EIA inventory data showed a much larger than expected decline in supplies. EIA gasoline stocks fell 3.537 million barrels. Some traders were encouraged by an increase in refining capacity that still produced a significant decline in supply. EIA gasoline stocks are 6.334 million barrels above last year and 5.648 million above the five year average. Average total gasoline demand for the past four weeks was down 6.12% compared to last year. Gasoline imports came in at 564,000 barrels per day compared to 632,000 barrels the previous week. Yesterday’s more than $0.04 gain from the low of the session, followed by early strength this morning, provides the bull camp with the early edge. The market has gap resistance up to $3.3864, then last week’s high of $3.3999. A rising uptrend line from the February low $3.1906 continues to support the market on weakness. That level stands at $3.3120 today.

HEATING OIL: May heating oil prices experienced a flat to lower trade overnight and during the early morning hours but remain inside of yesterday’s trading range. Heating oil prices came under pressure in response to yesterday’s EIA inventory report and managed to stabilize throughout the afternoon trade. May heating oil came under selling pressure this morning, tracking losses in crude oil, but was able to hold up above yesterday’s low of $3.2038. EIA distillate stocks fell 711,000 barrels and stand at 17.459 million barrels below last year and 1.915 million above the five year average. Distillate imports came in at 165,000 barrels per day compared to 174,000 barrels the previous week. Average total distillate demand for the past four weeks was down 8.61% compared to last year. EIA heating oil stocks rose 445,000 barrels and are 5.034 million barrels below last year and 5.728 million below the five year average. May heating oil has gap support below at $3.1975-$3.1928. Near term resistance comes in at $3.2618.

TODAY’S ENERGY MARKET GUIDANCE: The crude oil complex is mixed to start this morning, as it digests yesterday’s EIA inventory report, prospects for a strategic petroleum reserve release and lingering geopolitical risks. The crude oil market appears to be on a mission to challenge the lower end of the February to March trading range at the $104.30 level. May RBOB prices continue to respect an uptrend line from the February lows, which has been tested on five separate occasions and contained weakness. That level comes in at $3.3120 today.

Interest Rates: June Bonds on Lower Track; Lowest Level Since 10/31/08.

by Dave Hightower on March 14, 2012

June bonds are on a sharply lower track during the early morning hours, breaking down to their lowest level since October 31. The overnight breakdown in the US Treasury market comes as Asian markets react to the rally in global equity markets and comments from the Fed acknowledging an improving US economic backdrop. While there has been an improvement in the latest round of US economic readings, confirmation on that point from the Fed was seen as a factor taking a third-round of quantitative easing off the table. The Fed expects moderate growth in coming quarters and a gradual decline in the unemployment rate, while vowing to keep short-term rates at extremely low levels into 2014. With a diminishing chance for more QE and a surge in global equity markets, inflation expectations have ticked up. In fact, breakeven rates on 10-Year TIPS rose to a new seven-month high yesterday of 2.38%. That is up around 70 basis points from the September 2011 low and highlights the rising threat of inflation in the market. Two-Year Note yields also reached their highest level since September 2011 (0.35%). The US Treasury Yield curve steepened, with the 2 vs. 10-Year Note spread widening back out to 179, up 8 basis points yesterday. The price decline in June bonds, down more than 4-00 from last week’s high of 142-10 has coincided with an 18 basis point jump in yields. This should help bolster demand for today’s $13 Billion in 30-Year Bond auction. Yesterday’s 10-Year Note auction was well-received, with a bid to cover ratio 3.241, compared to the 10 auction average of 3.10 and a high-yield of 2.076%. The latest decline in the Treasury market will look to this morning’s scheduled flow of economic data to confirm the improving growth theme. This comes after better than expected US Retail Sales data yesterday that climbed to its best level in five months. The Treasury markets could get a reaction from this morning’s European inflation data, which is expected to come in above their 2.0% target this morning. Fed Chairman Bernanke speaks at a community-bankers convention this morning and could provide a follow-up to the US economic outlook conveyed at yesterday’s FOMC meeting. The scheduled flow of US economic data this morning includes the Mortgage Bankers Association mortgage market index and the latest read on February Import and Export prices for February. The US Q4 current account deficit is expected to come in around $114 billion, which is slightly larger than Q3 levels.

Stocks: Bulls Have a Number of Positives Working In Their Favor

by Dave Hightower on March 14, 2012

Confidence is running high within global equity markets following yesterday’s improved economic assessment from the US Fed and favorable result on US bank stress tests. The Japanese Nikkei finished the overnight trade up 1.5% and registered its first close above the 10,000 level in seven months, helped by an improved US economic outlook and a weaker Japanese Yen. Meanwhile, the Chinese Shanghai composite experienced negative reversal action overnight, with a failed test of recent highs and finishing down more than 2.5%. A sell-off in property-related shares seemed to drag the market lower after a government meeting did not result in further easing in the property sector. European shares rallied to their best level in seven-months, led by a more than 2.0% gain in the financial sector. Risk-sentiment in the US market took on a new level of optimism late yesterday following the FOMC meeting comments and news that 15 of 19 banks passed Federal Reserve stress tests. The stress test results provide the go ahead for US banks to increase their dividend payouts and reflect a considerable turnaround in the US financial sector from the 2008 crisis.

S&P 500: The June S&P 500 climbed to a new contract high overnight and reached its highest level since June of 2008. The index held gains during the FOMC meeting announcement but exploded on reports that JP Morgan was raising its dividend and buying back shares. This carried financial shares as a group by nearly 4.0% on the session. European bank shares were up more than 2.0% during the early morning hours, led by a 4.0% gain in Barclay’s, and that is seen as a positive force this morning. The June S&P 500 is up more than 140 points in 2012, into this morning’s high, and has only had 2 minor corrections: a late-January break of 30 points and the March break of 36 points. While sentiment is running high from the improving trend of US economic data and financial sector recovery, the overbought condition of the market has become more dependent on better than expected data to keep the trend intact. Swing low support stands at 1370.40. The breakout from recent congestion targets 1406.40.

DOW: The June E-mini Dow registered another contract high in overnight action, on follow-through optimism following the FOMC meeting and US bank stress test results. One of the big benefactors in yesterday’s trade was the shares of JP Morgan, which surged more than 7.0% on the session and climbed to a new 10-month high. The company announced plans to increase their dividend and repurchase $15 billion in stock. The surge in the shares of JP Morgan, as well as Bank of America, lifted the Dow Jones cash index to its highest level since December 2007. Yesterday’s upside breakout above a six week congestion zone and follow-through action overnight is a positive technical development, with an upside target of 13,334. Meanwhile, the 8.5% rally in 2012 into yesterday’s high and overbought momentum indicators are a near term concern. Bulls have the edge to start, with swing low support below at 12,967.

NASDAQ: The June NASDAQ registered a higher high in overnight action and has held in the upper end of yesterday’s trading range. The June NASDAQ ended yesterday session with a 1.8% gain and the NASDAQ Composite reached its best level since December 2000. Some of the optimism in the NASDAQ came in response to yesterday’s positive US Retail Sales data that showed its best monthly gain in five months. This bolstered tech-related shares and supports the notion of a healthy US consumer. The NASDAQ was also supported by a more than 2.0% gain in the shares of Apple, following an analyst raising the price target for the company toward $700.00. It is also worth pointing out that option trading activity on the CBOE showed a very active put trade during yesterday’s advance. Recent technical action in the June NASDAQ projects a further push toward 2720.00. The short term uptrend pattern supports the bulls, with support at 2653.50.

TODAY’S MARKET IDEAS: The bulls have a number of positives working in their favor, including an improved economic outlook from the Fed, evidence of a recovering US financial system and a “buy the dip” mentality from portfolio managers’. Complacency has increased further as a result, with the CBOE Volatility Index falling to its lowest level since June 2007. While trading volume on the New York Stock Exchange was about 16% above the 30 day moving average yesterday, the trend throughout the 2012 rally has been a concern. Another potential negative comes as insider sales for S&P 500 companies climbed to their highest level since December 2009. While these negatives suggest that the market is due for a corrective break, the short term trend continues to support the bulls until 12,810 comes out in the June E-mini Dow and 1370.40 for the June S&P 500.

Currencies: Rebounding Macro-Econ Sentiment Pressures Dollar

by Dave Hightower on March 8, 2012

DOLLAR: The Dollar continues to slide lower this morning as a rebound in macro-economic sentiment is weighing heavily on prices. Indications that there will be enough participation in the Greek bond swap for the deal to move forward has caused an erosion of safe-haven support, although not enough for the Dollar to tumble back towards last week’s lows. The results of the ECB and Bank of England meetings could also help to soothe market anxiety, although the Dollar’s focus may already be shifting towards tomorrow’s US jobs data. Another new low for the move in Jobless Claims this morning may apply further pressure to the Dollar as well, but there is more than enough uncertainty in the market to keep any Dollar sell off from turning into a full blown meltdown. The Dollar may find support around the 79.30 level early on during today’s session but expect a bumpy ride as the markets will react swiftly to any and all fresh news headlines.

EURO: The March Euro continues to recover from yesterday’s lows as there are signs that the Greek debt swap deal may have enough participation to go forward, although not enough to avoid the use of Collected Action Clauses to force haircuts onto holdout bondholders. There is still enough uncertainty over the level of participation in the Greek debt swap to hold Euro gains in check until a “final” participation level is made known to the market. Today’s European Central Bank meeting may become a secondary factor, as there are few expectations that the ECB will adjust their monetary policy or provide additional liquidity measures to the market. The March Euro may find resistance near the 132.40 level during this morning’s trading but may be waiting for an “all-clear” signal from Greece before making any larger upside move.

YEN: The March Yen has come under pressure during the last few hours but has avoided plunging into new low ground this morning. Another set of weak Japanese economic data was highlighted by a record deficit in their current account during January. There has also been mild pressure from the lost of safe-haven support, although any retest of last week’s lows may not occur until the Greek debt swap results are made official. The March Yen may find support near the 122.75 level this morning but it remains solidly within a longer-term downtrend.

SWISS: The March Swiss was able to lift clear of the recent lows and is finding carryover support from Euro zone optimism this morning. A mild positive reception for the Swiss CPI numbers has also helped to underpin today’s gains but the March Swiss will likely take most of its direction from the ebb and flow of Euro zone sentiment during the session. The March Swiss may find resistance near the 109.85 level this morning and it would get an additional boost from a positive result to the Greek debt swap.

POUND: The March Pound has posted sizable gains today and is also finding support from market optimism towards the Greek debt swap. Today’s Bank of England meeting is not expected to provide fresh changes to policy, which may keep the Pound’s focus on events in the Euro zone. The March Pound may find resistance near the 158.20 level this morning and may be heading back towards last week’s highs if macro-economic sentiment continues to improve.

CANADIAN DOLLAR: The March Canadian continues to gain ground this morning, although the market still has some work to do in order to recover back towards the late February highs. Today’s Canadian housing numbers could provide a further lift to prices this morning but in all likelihood the March Canadian will find most of its support from improving market sentiment. The March Canadian may find resistance near the 100.65 level and should remain well supported throughout the session.

TODAY’S MARKET IDEAS: The Dollar is likely to remain under pressure this morning, although losses may be limited until the market has a clearer picture of the Greek debt swap results. Improving macro-economic sentiment should help the March Canadian Dollar climb back towards last week’s highs for the move.

Stocks: Benefit from a Surge in Risk-Appetites This Morning

by Dave Hightower on March 8, 2012

Global equity markets are on a sharply higher track during the early morning hours, supported by growing optimism that Greece will be able to pull off its debt swap deal. This optimism has lit a fire under risk appetites, which in turn has sparked a rally in equity and commodity markets. The Japanese Nikkei broke a three-day losing streak overnight with a gain of 2.0%, helped by growing participation for today’s Greek debt swap deal, a weaker yen and positive US sentiment. The major European indices were all up more than 1.0% during the early morning hours and that was accomplished ahead of interest rate policy meetings from both the ECB and Bank of England. In addition to optimism surrounding Greece and their ability to secure a second bailout installment (130 billion Euros) and stave off a disorderly default, markets have also embraced ideas that the US Fed may be considering further quantitative easing measures. The prospect of more easy-money sloshing around the capital markets is seen as a rising tide lifting markets this morning. The US labor market comes into focus this morning, with traders looking for clues ahead of tomorrow’s Non-Farm Payroll data from a report on February job cuts and from weekly initial jobless claims.

S&P 500: The March S&P 500 has taken a higher track this morning, as it goes for a challenge of Tuesday’s high (1366.00). Strong upside showings in Asia, as well as 2.0% gains in European bank shares this morning is expected to carry through into the Wall Street open. Reports of a strong take up for today’s Greek debt swap deal from private investors brings the country a step closer to avoiding a nasty default, and that has fueled a risk-on tone this morning. The US Treasury is expected to recoup some of its investment in AIG today, with the sale of $6 billion in shares. Prices are offered at a slight discount, and that has weighed on AIG shares in pre-market trading. The March E-mini S&P 500 has broken out above yesterday’s inside day trading range, and that offers the bulls camp the early edge. The market faces a ceiling of resistance at 1369.50 to 1377.00.

DOW: The March E-mini Dow traded higher throughout the early morning hours and broke out above yesterday’s inside day trading range. It seems that a positive shift in sentiment, from growing participation for today’s Greek debt swap deal, as well as hints from the Federal Reserve over more quantitative easing, has inspired a move back into Dow components after this week’s break. Shares of Boeing were up 1.0% in early German trade, helped by better than expected profits from its rival EADS. The company forecasted a positive demand outlook for Airbus orders in 2012. The early morning action in the March E-mini Dow favors the bull camp for a further push toward 12,985.

NASDAQ: The March NASDAQ has fully recovered from Tuesday’s slide and stands about 20 points away from contract highs at 2650.00. The index has a couple of positives working in its favor, including fresh buzz surrounding Apple’s new iPad release and an early risk on vibe in outside markets. It appears that the new iPad has garnered excitement from the tech crowd, with the market now looking for confirmation from investors. A number of Asian companies within the Apple supply chain saw strong gains overnight, and that could support shares this morning. The index is also expected to get the latest earnings from Altera, which has warned of softening semiconductor demand for some of its products. Strong overnight gains in the March NASDAQ leave 2650.00 as the next upside stopping point.

TODAY’S MARKET IDEAS: Equity markets benefit from a surge in risk-appetites this morning, fueled by expectations for a favorable result with Greece’s debt swap, indications that the Fed is considering further quantitative easing measures and buzz surrounding Apple’s new iPad. The early drive higher could face a boost in volatility ahead of this morning’s economic calendar, Greek swap deadline this evening and tomorrow’s Non-Farm Payroll report. We would expect the March E-mini Dow and S&P 500 to continue to move higher for a re-test of near-term resistance at 12,985 and 1367.00. Failure to confirm a move above these levels would keep the down trend pattern in tact. Aggressive bears might consider selling strength into resistance, risking a move into new contract highs of 13,042 in the Dow and 1377.00 in the S&P 500. Downside targeting for the March E-mini Dow comes in at 12,600 and 1320.00 for the March S&P 500.

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