Daily Market Analysis for May 11 2011 by SolidityBrokers.com

Wall Street tallied robust gains Tuesday to extend a winning run into a third session after Microsoft said it would buy Internet-phone company Skype for $8.5 billion. The deal bolstered expectations of more buyouts to come. The Dow Jones Industrial Average rose 75.68 points to 12,760.36,its highest close in a week. The Standard & Poor’s 500 Index gained 10.87 points to 1,357.16, while the Nasdaq Composite Index added 28.64 points to 2,871.89, its highest close this month.


Before Tuesday’s opening bell, stock-index futures maintained gains after the government said prices of goods imported into the U.S. climbed more than expected in April. The Labour Department data showed a 2.2% rise in the import-price index. Later data had the Commerce Department reporting inventories at U.S. wholesalers rose 1.1% in March, and sales of wholesalers gained 2.9% during the same period.

Crude-oil futures closed higher Tuesday, topping $103 a barrel as gasoline futures climbed 3% on growing concerns that flooding along the Mississippi River will hurt refinery operations. But trading in the oil market during the session was volatile, and by a lower 2011 global demand forecast from the U.S. Energy Department. The market is recovering from an overcorrection lower at the end of last week, and intraday volatility is poised to remain high as oil fundamentals remain unchanged and bullish on trend.

Today’s Important Economic Announcements (GMT)

8:30 AM GBP Trade Balance

9:30 AM GBP BOE Gov King Speaks & BOE Inflation Report

12:30 PM CAD Trade Balance

12:30 PM USD Trade Balance

2:30 PM Crude Oil Crude Oil Inventories

5:00 PM USD FOMC Member Kocherlakota Speaks

6:00 PM USD Federal Budget Balance


Crude Oil

An especially sharp and aggressive wave of rice drops negatively affected the price of oil, causing a fall from record heights of 115 dollars to a new low of 96 dollars within the space of just four days. We are at a tipping point where we either revert to last week’s bearish sentiment, or resume the uptrend. The key market to watch is crude oil. Fundamentally, crude has had its margins increased but the flooding of the Mississippi puts gasoline refineries in harm’s way. We’ll have to see what impact tomorrows inventory report has, and to what effect the trade balance data will have on the dollar. For today, our predictions call for a technical correction in response to this week’s positive trend.

Stop Loss: 106.5

Take Profit: 100.3





The pair rose again yesterday, and is hanging around the 80 level still. A break of the 80 level will certain get the attention of the central banks, and if we break lower – we are not willing to short because of it. The long trade could be setting up, but the market seems to be weak. Perhaps we need to see intervention in order to get USD buyers back in the market. We buy strength, and we ignore weakness at these levels. The outlook remains cautiously bearish and much will depend on the price action by the USD on the back of persistent concerns over the stability in the Japanese economy. The technical picture clearly shows a divergence in the hourly chart, suggesting short positions are encouraged.

Stop Loss: 81.03

Take Profit: 80.52





Euro tanked broadly again on Friday in New York midday after German Der Spiegel magazine reported that Greece Government raised the possibility of leaving eurozone was considering to reintroduce its own currency. Later, ECB officials including Chairman Jean-Claude Juncker, Austrian Finance Minister spokesman, French Finance Ministry official and Slovak Finance Minister Miklos came out and tried to comfort market by saying that the report was not valid. A Greek official also denied that Greece was considering the idea of leaving the eurozone.  The value of the RSI indicator is positive and hesitant, MACD is thinly positive and quiet, while CCI is in line with the 100 line on the 1 hour chart, giving overall neutral to light long signals. We are expecting the EUR/USD to recover slightly today.

Stop Loss: 1.4285

Take Profit: 1.4500



Published by www.SolidityBrokers.com