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FedEx, UPS Predictors of Potential Market Weakness


These economically sensitive stocks tend to more accurately reflect true business conditions.


Technical Relevance

Bonds: The yield on the benchmark 10-year bond opened higher and closed near the high of the day at 3.78%. After moving from 3.2% to 3.7% in just 15 trading days, the 10-year yield has now spent the last 15 sessions stuck in a range between 3.7% and 3.85% (a range of 4%).

Stocks: A late-day rally left equities higher on the session; NASDAQ had the best performance, up more than 1%. After consolidating from late November 2009 to late December 2009, stocks have drifted higher on light volume the past three weeks. As with the 10-year bond, the trading range has been narrow; the S&P and Dow have been confined to a 3% range, while the NASDAQ has been in a 4% trading band.

Commodities: After gapping lower along with stocks and being down 2% Wednesday, commodities began a rally shortly after crude oil inventory data was released at 10:30 a.m. (see chart below) that took the DBC back to breakeven. DBC volume was 50% above its 50-day average for a second straight day. Nearly all of that volume has occurred below 24.80. The DBC has been volatile, with a trading range of more than 9% during the last three weeks.

The US Dollar Index again tested support at 76.73 after flirting with even lower levels early Wednesday. Support at 76.73 is now joined by the DXY's seven-week uptrend line -- in place since the lows were put in on November 25. These levels are sure to be tested again today and it will be very important to see if the DXY holds or breaks.

Crude Oil Futures (5-minute bars):

Click to enlarge

This morning: Japan, Singapore and Australia were all higher, while Hong Kong was marginally lower. European markets are uniformly higher by about 0.25% - 0.50% as of 6:45 a.m. EST. Oil is trading slightly higher and gold is nearly unchanged. Economic data due out at 8:30 and 10:00 this morning should be important. Watch the dollar and the DXY (slightly higher as of this writing).

Earnings Due Out Today

  • Intel Corp. (INTC) after the bell

  • Click here for complete rundown of companies reporting earnings, estimates and actual results.

Economic Reports Due Out Today

  • Jobless Claims, Retail Sales and Import/Export Prices at 8:30 a.m.

  • Business Inventories at 10 a.m.

  • Natural Gas Inventories at 10:30 a.m.

  • 30-year Treasury Bond Auction at 1 p.m.

  • Click here for complete rundown of economic releases including actual versus estimated data.

Market Internals: NYSE
(Figures are rounded)

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No positions in stocks mentioned.

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