Guesstimates on March 5, 2012

March S&P E-mini Futures: Today's day session range estimate is 1363-1375. The rally from the November 25 low has now matched the size of the October 2011 rally and has also carried the market to its May 2011 top. So I think it is likely that the market's advance will pause near this resistance. A drop of 50-70 points is likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The euro has bounced twice off of 1.3485, just shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: I am switching my views on the yen. It has started to accept prices above the 81.00 level. I now think the market is headed for 85.00 and eventually will move to 90.00. This is a good sign for worldwide equity markets because it means that the Japanese central bank is trying to raise the growth rate of Japanese nominal national income and will probably succeed.

April Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: Gold should find support near 1680. A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: AAPL has reached 545 resistance. I think it will stall here temporarily. Support is at 518. Next upside target is 575.

Guesstimates on March 2, 2012

March S&P E-mini Futures: Today's day session range estimate is 1368-1377. The rally from the November 25 low has now matched the size of the October 2011 rally and has also carried the market to its May 2011 top. So I think it is likely that the market's advance will pause near this resistance. A drop of 50-70 points is likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The euro has bounced twice off of 1.3485, just shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: I am switching my views on the yen. It has started to accept prices above the 81.00 level. I now think the market is headed for 85.00 and eventually will move to 90.00. This is a good sign for worldwide equity markets because it means that the Japanese central bank is trying to raise the growth rate of Japanese nominal national income and will probably succeed.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: Gold should find support near 1680 after yesterday's $90 break. A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: AAPL reached 545 resistance yesterday. I think it will stall here temporarily. Support is at 518.

Guesstimates on March 1

March S&P E-mini Futures: Today's day session range estimate is 1358-1370. The rally from the November 25 low has carried the market up to its May 2011 top. The rally from the November 25 low has now matched the size of the October 2011 rally. So I think it is likely that the market's advance will pause near this resistance. A drop of 50-70 points is likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: On Friday the euro traded as high as 1.3485, just shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: The yen has been trading a little above resistance at 80.00. If the market starts spending time above 81.00 I will conclude that it is headed for 90.00. Until then I am sticking with my 70.00 target.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: Gold should find support near 1680 after yesterday's $90 break. A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: AAPL reached 545 resistance yesterday. I think it will stall here temporarily. Support is at 518.

will the ECB take away the punch bowl?

Today marked the second phase of the European Central Bank's cheap finance program designed to support the EU commercial banking system. The program is an open ended offer by the ECB of cheap, three year financing against bad collateral. According to reports EU commercial banks borrowed even more than expected today, probably because they are worried that the ECB will soon take away this punch bowl.

The effects of this program can easily be seen in the bottom two charts. The lower chart is a daily bar chart of the German stock stock market index, the DAX, while the middle chart is a daily chart of the S&P 500. The ECB announced its two phase financing program in early December of 2011. The initial market response was negative because it was feared that the program would not do enough to stave off a European banking crisis. But when the first round of financing was completed on December 20 the markets saw the effects of the program on the European bond markets - yields came down substantially on paper issued by governments with financial problems. The DAX and the S&P 500 then embarked on rally which has continued to this day.

But will the ECB take away the punch bowl? My guess is that they won't, especially if the stock markets start dropping from current levels. You can see on the charts what happened to the S&P and the DAX when the Fed ended its two quantitative easing programs. The first ended in April of 2010 and the second a year later. Both times the US and European stock markets dropped. My guess is that something similar will happen now but I don't think the drop will be nearly as bad as the ones in 2010 and 2011. Moreover, when the ECB and the Fed see what is happening I think both will step in with new financing programs which will ultimately boost the markets above today's highs.

The top chart is a chart of the euro priced in dollars. The most bullish thing that can happen to the euro from the perspective of US and European stock markets is a resumption of its drop to 1.200 and below. Such action would be a reflection of the ECB's willingness to do whatever is necessary to stave off a renewed financial crisis in Europe. Based on their behavior over the past three months I think they are willing to do this.

But first I think the markets will have to throw a scare into the Fed and the ECB. If so I expect the euro will rally some distance from current levels before resuming a longer term decline. I also think that the DAX and the S&P 500 are likely to break, perhaps back to their 200 day moving averages (red lines on the charts) before ultimately moving much higher.

Guesstimates on February 29, 2012

March S&P E-mini Futures: Today's day session range estimate is 1369-1381. The rally from the November 25 low has carried the market up to and a little above 1370 which has made that rally as big as the October 2011 rally. The May 2011 top was at 1373. So I think it is likely that the market's advance will pause near these resistance levels. A drop of 50-70 points is likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: On Friday the euro traded as high as 1.3485, just shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: The yen has been trading a little above resistance at 80.00. If the market starts spending time above 81.00 I will conclude that it is headed for 90.00. Until then I am sticking with my 70.00 target.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: AAPL rallied to new bull market highs yesterday. Resistance above the market now is at 545.

Guesstimates on February 28, 2012

March S&P E-mini Futures: Today's day session range estimate is 1353-1368. The rally from the November 25 low has carried the market up to and a little above 1370 which has made that rally as big as the October 2011 rally. The May 2011 top was at 1373. So I think it is likely that the market's advance will pause near these resistance levels. A drop of 50-70 points is likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: On Friday the euro traded as high as 1.3485, just shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: The yen has been trading a little above resistance at 80.00. If the market starts spending time above 81.00 I will conclude that it is headed for 90.00. Until then I am sticking with my 70.00 target.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: AAPL rallied to new bull market highs yesterday. Resistance above the market now is at 545.

Guesstimates on February 27, 2012

March S&P E-mini Futures: Today's day session range estimate is 1350-1360. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. After that top is exceeded a drop of 50-70 points again becomes likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: On Friday the euro traded as high as 1.3485, jut shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: The yen has been trading a little above resistance at 80.00. If the market starts spending time above 81.00 I will conclude that it is headed for 90.00. Until then I am sticking with my 70.00 target.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: A drop to 475 or so is likely. After that AAPL should head for the next resistance at 545.