Latest Take on the Market

Overall I continue to maintain a bearish outlook. As the markets move back up, I look at higher prices as opportunities to get short. I believe we have yet to see lower lows. In speculative terms, I am looking for a bottom on the ES between 1180 and 1225. A daily close on the ES above 1300 would make me reconsider my outlook.

This morning however, US markets are gapping up following positive gains abroad. The nuclear situation in Japan appears to have stabilized, and western powers have launched attacks across the coast of Libya to take control of Libyan airspace.

Though we are now seeing gains for the 3d straight day since moving down 100 points off the February highs on the ES, there remains significant overhead resistance and the news around the world certainly isn't peachy.

Below I'll mention a few concerns that support my negative bias.

Despite the nuclear situation being under control in Japan, there is new smoke rising from reactor #2 and the critical reactor #3. Spokesmen from the Fukushima Power Complex said they did not know the cause. This is still a dangerous situation. Any new news that is bad news could influence another wave of selling

The downturn in Japan's economy following the earthquake will be severe. As the 3d largest economy in the world, its effects will be felt globally.

Protests and violence in Yemen are escalating and senior officers are defecting to support the opposition that wants to oust Yemen leader Saleh. The United States supports Saleh as he is a partner in the war against al-Queda.

It has yet to be confirmed, but it appears there could be another oil spill in the Gulf of Mexico. A 100x10 mile oil slick appeared over the weekend 30 miles SE of the Mississippi River delta. This could be one of three things; 1] A new oil spill (possibly from the Matterhorn SeaStar oil rig, owned by W&T Offshore, Inc), or 2] a new leak from the plugged Deepwater Horizon well, or 3] what the coast guard has recently said is most likely a plume of silt from a dredging operation on the Mississippi River.

The Coast Guard should have a more definitive report soon.

Gaddafi not backing down in Libya:
Since western powers have begun air strikes to enforce a no-fly zone over Libya, Gaddafi told Libyan state TV that the attacks "amounted to terrorism" and that Libyans would be armed to go out and fight in his name. Gaddafi is now reported to be using human shields in an attempt to deter opposition fire.
The Arab League, one week after urging the United Nations to operate a no-fly zone on the North African state, are now criticizing the military action.


Will play this market as we see it for now, not sure if we will see a downturn or not today, but expect further downside to be in the cards in the near future.

Key levels to watch on the ES today:
Resistance above at: 1291-1294, 1297-1299
Support below at: 1285-1287, 1282-1283, 1277-1278, 1273-1274