Tuesday, August 03, 2010 – Early morning observation

Tuesday, August 03, 2010 – Early morning observation

Asia markets closed higher, especially the NIKKEI which closed up 123.70 points or 1.29 percent. . The Hang Seng mildly closed higher by 44.87 points or 0.21 percent. As of this writing, the STOXX 50 is slightly down by 4.92 percent.

The US equity futures markets are mix with the DJIA Index -7.00, S&P 500 -1.30, and the Q’s are close to flat at 0.25. This is normally expected after yesterday’s major upward move on these three major US indexes. The bulls should be able to hold these levels given yesterday’s market strength. What is critical is the Friday’s employment numbers that if its worst then estimated could drive the markets lower to last week’s levels. One of major concerns is the weak US Dollar against the Yen and very low yield on the front end of the US yield curve which indicates no economic weakness. Notwithstanding, copper prices continue to rise so there is demand for this precious metal.

Support and resistant levels for the QQQQ and SPY are as follows:
Support 1 QQQQ $46.29 and for the SPY $111.85
Support 2 –QQQQ $45.95 and for the SPY $110.98

Resistance 1 QQQQ $47.05 and for the SPY $113.32
Resistance 2 QQQQ $47.15 and for the SPY $113.84