Daily Market Review for 06/05/2011 by SolidityBrokers.com

U.S. stocks fell sharply on Thursday, extending losses into a fourth day for two of the benchmark indexes, as equities and commodities were hit after a surprise rise in jobless claims. Down for the third session this week, the Dow Jones Industrial Average fell more than 200 points, and finished down 139.41 points at 12,584.17, The Standard & Poor’s 500 Index declined 12.22 points at 1,335.1. The Nasdaq Composite Index fell 13.51 points to 2,814.72. The government on Thursday said claims for unemployment benefits unexpectedly climbed last week. The jump in applications for unemployment benefits doesn’t bode well for Friday’s payrolls data.

A separate report said U.S. productivity slowed in the first quarter, rising at an annual rate of 1.6% compared to a 2.9% increase in the prior quarter. The economic data, other than manufacturing, in the month of April was quite weak. All bundled together ahead of our unemployment rate today pulled risk off the table. In our astonishment, equities held their ground fairly well given the circumstances. If every other sector is unwinding, one would have to assume that stocks would be a safe haven to allocate assets, as cheaper commodities will have to help the bottom line. But we don’t expect this shift in capital to come in until after today’s non-farm payroll data.

Ahead of today’s monthly payrolls report, oil, gold and silver futures fell, part of a broad pullback in commodities that has oil down nearly 13% so far this week. Today’s action could very well go down in history with silver dropping 10%, the first time since 1983. Natural gas down 35 cents, the magnitude of these moves will eventually have to be bought, but there’s no indication of a bottom in site. Regardless of whether we have positive data or not today, we believe investors will continue to take risk off leading into the weekend. Keep in mind we have currency option expiry today, which may contributed to the sell-off. Any dead cat bounce needs to be sold.

Today’s Important Economic Announcements (GMT)

8:30 AM GBP PPI Input m/m

9:30 AM GBP BOE Gov King Speaks

10:00 AM EUR German Industrial Production m/m

11:00 AM CAD Employment Change & Unemployment Rate

11:30 AM USD FOMC Member Yellen Speaks

12:30 PM USD Non-Farm Employment Change & Unemployment Rate

1:00 PM CAD BOC Gov Carney Speaks

Crude Oil

Crude oil futures edged back up above $100 a barrel in electronic trading on Friday, regaining some ground after crude suffered its biggest loss in more than two years. Light, sweet crude for June delivery added 85 cents to $100.85 during Asian trading hours. Oil prices plunged as low as $99.35 during the North American session, registering its biggest one-day percentage decline since April 20, 2009. A weak U.S. jobs report and the sell-off in other commodities weighed on the crude market. If you think limit down in crude is simply a correction, then you have another thing coming. Prior to Middle East tensions, we were trading in the high $80 range, so we would expect $90 to be in the cross hairs for the time being.

Stop Loss: 104.0

Take Profit: 97.00



We are flat due to it being Friday and the NFP release today. Trichet was quoted as saying that ‘current monetary policy is very accommodative; underlying pace of monetary expansion remains moderate; rates remain low, inflation likely to stay clearly above 2% on coming months. Inflation expectations must remain firmly anchored can hike rates as appropriate. The inverse effect on the dollar along with the ECB holding rates steady catapulted the US dollar over a full handle. Our primary trade idea is to short on a sustained break below 1.4500 with targets down to 1.4400. Additionally, there is another aggressive opportunity for a short on rise to 1.4715 resistances for a re-challenge of 1.4550 support. With NFP data due out at 12:30 PM (GMT) we are very bearish.

Stop Loss: 1.4712

Take Profit: 1.4303



The British pound weakened against the dollar in another volatile trading session. Despite falling sharply from Asian high of 1.6544 to 1.6446 after the release of much weaker-than-expected U.K. CIPS services PMI data which came in at 54.3 versus economists’ forecast of 55.7, cable managed to recover in European midday. However, intra-day selloff in euro dragged the pound lower and price pierced through the low of 1.6405.Later, another wave of selling interest emerged in late New York session and cable eventually fell to an intra-day low of 1.6357 before staging a recovery. Bank of England (BOE) kept key interest rates unchanged at 0.5% as expected and maintained its asset purchase target at 200 billion pounds. We expect yesterday’s downtrend to continue into the weekend.

Stop Loss: 1.6523

Take Profit: 1.6285


Published by www.SolidityBrokers.com