Week of Mar 09, S&P 500 & Corn

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Stock Index Corner: S&P 500

Last week's bearish action has confirmed that downtrend is continuing and the Jan's low will likely be tested this coming week. if the Jan's low if 1270 is broken, the next support will likely be at 1220, the June 2006's low.

This week, I am also introducing my favorite proprietary Power Indicator which I use to define market top and bottom. It is also very useful in helping me define strength of continued trend. In the chart of S&P 500 above, you can see that Oct 2007 Top has a divergence with the Power Indicator, ie the the market was making higher highs but the Power Indicator was making lower highs...that is one of the most powerful technical signals. Since the divergence, the market has moved lower by about 20% !

The current weekly trend shows the downtrend is picking up steam !! . Look at the Power Indicator again, the red bars are getting longer....The bears are celebrating the falls for sure..!

S&P500:

Big Picture: (monthly): Bearish..

Medium term (weekly): Sideway to Bearish

Short term (daily): Bearish

Fundamental:
U.S. Economy The U.S. Labor Department said that the unemployment rate improved from 4.9% to 4.8% in February while non-farm payrolls declined 63,000. The drop in the number of jobs was weaker than expected and the largest monthly decline in five years. The June U.S. T-bonds closed up a half-point at 117.05/64ths.

In January, the number of non-farm payrolls was revised from down 17,000 to down 22,000. In December, the number was revised from a gain of 82,000 to a gain of 41,000. The December eurodollars were up .13 at 97.765.

The Federal Reserve said that its Term Auction Facility (TAF) will auction $50 billion to banks on March 10th and another $50 billion on March 24th in an effort to provide more liquidity. The auctions were originally set at $30 billion, but the Fed is trying to ease the credit crisis and they also said that they will auction more in the future, if necessary.

Major World Indexes ( No change since last week)

Medium term trend: UK FTSE (Down), Nikkei (Down,), Australian ASX (Down), Shanghai FXI (down)

Commodity Corner: Corn

Technical:The technical picture is getting bearish as the Bearish Reversal appeared on last Friday. The bull run of Corn has began since Nov last year and the upward steam may be easing. The other grains markets like the Soybean, Soybean Meal, and Wheats are showing similar signs of toppishness.

The Commericals COT Index is showing extreme short relative to last 52 week's positions. Possible correction for the Corn in the coming weeks.

Fundamental:
On February 8, 2008, the USDA kept its estimate of 2007-2008 U.S. ending stocks unchanged at 1.438 billion bushels. That puts the 2008 ending stocks to use ratio at 11%, the lowest in four years. On the world scene, the USDA is looking for 2007-2008 ending stocks to fall from 107 to 102 million tons, or 13% of annual use. In 2007-2008, exports are expected to be up 15% and, so far, they are up 15% from a year ago.

On February 22, 2008, the USDA released its projections for 2008-2009. They expect 12.81 billion bushels of production to result in 1.243 billion bushels of ending stocks, the lowest in five years. Of the 13.0 billion bushels of total use they foresee, 4.1 billion bushels are expected to go into ethanol production, up from 3.2 billion bushels the previous year.

Note: the above fundamentals are exerpts of dailyfutures.com

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Emini S&P 500 OTM Calls, Soybean, Corn OTM Calls
Futures: Short Gold (for very short term play, 2-3 days)

Stock Options: Long FSLR Puts, Long ISRG Puts(use ATM options)