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Daily Blog -03/11/09- 2:29 P.M.

Follow through on the rally is faltering

Yesterday's market rally was impressive and the party continued this morning for about 30 minutes. Stocks shot higher at the open but quickly ran out of gas. The U.S. indices have been slipping toward unchanged for most of the session. Overseas markets were mixed. Profit taking in financials weighed down any rally attempts. The French CAC 40 rose 0.4%. The German DAX added 0.7%. The British FTSE lost 0.5%.

Asian markets were also a mixed bag. The Chinese Shanghai index lost 0.9% while the Hong Kong Hang Seng rallied 2.0%. Yesterday the Japanese NIKKEI fell to 26-year lows. Today the NIKKEI bounced 4.5% erasing most of its losses from the prior three sessions. The latest Chinese export numbers made headlines. China's exports in February plunged 25.7% from a year ago to $64.8 billion. With the world buying less and China making less the energy markets were worried about future demand for oil.

The weekly oil inventory reports came out today and late last night. The EIA announced that crude oil inventories rose by 700,000 barrels compared to an estimated decline of 1 million barrels. Analysts were expecting gasoline stockpiles to drop 1.2 million barrels but inventories showed a 3 million barrel decline. Crude oil futures plunged 5% trading back under $43.50 a barrel. The USO oil ETF is down 4.7% and the three-day trading activity in the USO looks like a failed rally at its 50-dma.

Chart of the USO:

One commodity that is getting some attention today is gold. Gold futures were up over 1% and trading back above $900 an ounce. The GLD gold ETF is bouncing with a 1.4% gain and trading back above its 50-dma but still under what should now be resistance at $90.00 and the bottom of its bullish channel.

Chart of the GLD:

Here's a quick look at the major indices:

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the DJIA:

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