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Free stock pick for 02/02/2011

LIVESTOCK: April live cattle closed up $1.27 at
$114.05 today. Prices closed near mid-range today and hit
a fresh four-week high. The key "outside markets" were in
a bullish posture for the cattle market today, as the
U.S. dollar index was weaker, crude oil prices were
sharply higher and the U.S. stock indexes were firmer.
The cattle bulls have the overall near-term technical
advantage and gained fresh upside momentum today. Cattle
market bulls' next upside price objective is to push and
close prices above solid technical resistance at the
contract high of $116.30. The next downside technical
objective for the bears is pushing prices below solid
technical support at last week's low of $111.07. First
resistance is seen at $114.50 and then at today's high of
$115.10. First support is seen at $113.50 and then at
today's low of $113.00. Wyckoff's Market Rating: 7.5.

March feeder cattle closed up $1.77 at $128.00 today.
Prices gapped higher on the daily bar chart, hit a fresh
two-week high and closed nearer the session high today.
Today's solid upside price action did provide the cattle
market bulls with fresh upside near-term technical
momentum. Feeder bulls now have the solid overall near-
term technical advantage. Prices are in a 3.5-month-old
uptrend on the daily bar chart. The next upside price
objective for the feeder bulls is to push and close
prices above solid technical resistance at the contract
high of $129.95. The next downside price objective for
the bears is to push and close prices below solid
technical support at last week's low of $124.57. First
resistance is seen at today's high of $128.40 and then at
$129.00. First support is seen at $127.50 and then at
$127.00. Wyckoff's Market Rating: 8.0

April lean hogs closed up $2.37 at $94.00 today. Prices
hit a fresh contract high again today. The key "outside
markets" were in a bullish posture for the hog market
today, as the U.S. dollar index was weaker, crude oil
prices were sharply higher and the U.S. stock indexes
were firmer. The hog market bulls have the strong overall
near-term technical advantage and gained fresh upside
power today. Prices are in a steepening three-month-old
uptrend on the daily bar chart. The next upside price
objective for the bulls is to push and close prices above
solid chart resistance at $96.00. The next downside price
objective for the bears is pushing and closing prices
below solid technical support at $90.00. First resistance
is seen at today's contract high of $94.52 and then at
$95.00. First support is seen at $93.50 and then at
$93.00. Wyckoff's Market Rating: 9.0

Tuesday, February 1--Jim Wyckoff's Morning Web Log

NOTE: I had internet problems this morning. Thus,
the later report, which was written by my friend
and fellow trader/analyst Ken Seehusen. Ken's style
is a bit different than mine, but I think you'll
enjoy and benefit from it, too.--Jim

The STOCK INDEXES & MARKETS

The March NASDAQ 100 was higher due to short
covering overnight as it consolidates some of last
Friday's decline. Stochastics and the RSI are
bearish signaling that sideways to lower prices are
possible near-term. If March extends last Friday's
decline, the 25% retracement level of the
August-January rally crossing at 2197.43 is the
next downside target. Closes above last Thursday's
high crossing at 2334.50 would confirm that a
short-term low has been posted. First resistance is
the 10-day moving average crossing at 2292.80.
Second resistance is last Thursday's high crossing
at 2334.50. First support is Monday's low crossing
at 2248.50. Second support is the 25% retracement
level of the August-January rally crossing at
2197.43. The March NASDAQ 100 was up 14.25 pts. at
2294.25 as of 5:45 AM CST. Overnight action sets
the stage for a higher opening by March
NASDAQ 100 when the day session begins later this
morning.

The March S&P 500 index was higher due to short
covering overnight as it consolidates some of last
Friday's decline. Stochastics and the RSI are
bearish signaling that sideways to lower prices are
possible near-term. If March extends last Friday's
decline, the August-November uptrend line crossing
near 1261.90 is the next downside target. First
resistance is last Friday's high crossing at
1299.40. Second resistance is the July 2008 high
crossing at 1313.30. First support is Monday's low
crossing at 1262.60. Second support is the August-
November uptrend line crossing near 1261.90.
The March S&P 500 Index was up 6.50 pts. at 1288.90
as of 5:47 AM CST. Overnight action sets the stage
for a higher opening by the March S&P 500
index when the day session begins later this
morning.

INTEREST RATES

March T-bonds were lower overnight as it extends
the trading range of the past seven weeks.
Stochastics and the RSI are neutral to bullish
signaling that sideways to higher prices are
possible near-term. March needs to close
above the reaction high crossing at 122-07 or below
December's low crossing at 118-21 to confirm a
breakout of the aforementioned trading range and
point the direction of the next trending move.
First resistance is the reaction high crossing at
122-07. Second resistance is the 25% retracement
level of the October-December decline crossing at
121-17. First support is the reaction low crossing
at 119-06. Second support is December's low
crossing at 118-21.

ENERGY MARKETS

March crude oil was lower overnight as it
consolidates some of the rally off last Friday's
low. However, stochastics and the RSI remain
bullish signaling that sideways to higher prices
are possible near-term. If March extends the
rally off last Friday's low, January's high
crossing at 93.46 is the next upside target. Closes
below the 10-day moving average crossing at 89.05
would temper the near-term friendly outlook. First
resistance is Monday's high crossing at 92.84.
Second resistance is January's high crossing at
93.46. First support is the 10-day moving average
crossing at 89.05. Second support is the 38%
retracement level of the May-January rally crossing
at 85.51.

CURRENCIES

The March Dollar was lower overnight as it extends
the decline off January's high. Stochastics and the
RSI are oversold but remain neutral to bearish
signaling that sideways to lower prices are
possible near-term. If March extends this month's
decline, November's low crossing at 76.18 is the
next downside target. Closes above the 20-day
moving average crossing at 79.25 are needed to
confirm that a short-term low has been posted.
First resistance is the 10-day moving average
crossing at 78.20. Second resistance is the 20-day
moving average crossing at 79.25. First support is
the overnight low crossing at 77.41. Second support
is November's low crossing at 76.16.

GRAINS

March corn was fractionally lower overnight due to
light profit taking while at the same time
extending the trading range of the past three
weeks. The high-range close overnight sets the
stage for a steady to higher opening when the day
session begins. Stochastics and the RSI are
overbought, diverging but are neutral signaling
that sideways trading is possible near-term. Closes
below the 20-day moving average crossing at 6.37
would signal that a short-term top has been posted
while opening the door for a test of the reaction
low crossing at 5.95. If March renews this winter's
rally, the 87% retracement level of the 2008-
decline on the weekly continuation chart crossing
at 7.19 1/4 is the next upside target. First
resistance is the reaction high crossing at 6.67.
Second resistance is the 87% retracement level of
the 2008-decline on the weekly continuation chart
crossing at 7.19 1/4. First support is the 20-day
moving average crossing at 6.37. Second support is
the reaction low crossing at 5.95.

March wheat was lower overnight as it consolidates
some of Monday's rally. The low-range close sets
the stage for a steady to lower opening when the
day session begins trading later this morning.
Stochastics and the RSI have turned bearish hinting
that a double top with last August's high might be
forming. Closes below the 20-day moving average
crossing at 8.05 1/2 are needed to confirm that a
short-term top has been posted. If March extends
the aforementioned rally, the 50% retracement level
of the 2008-2010-decline crossing at 8.80 3/4 is
the next upside target. First resistance is
August's high crossing at 8.64 1/2. Second
resistance is the 50% retracement level of
the 2008-2010-decline crossing at 8.80 3/4. First
support is the 10-day moving average crossing at
8.30 1/2. Second support is the 20-day moving
average crossing at 8.05 1/2.

SOYBEAN COMPLEX

March soybeans were fractionally higher overnight
as it extends the trading range of the past five
weeks. The high-range overnight close sets the
stage for a steady to higher opening when the day
session begins later this morning. Stochastics and
the RSI are bullish signaling that sideways to
higher prices are possible near-term. If March
renews this winter's rally, monthly resistance
crossing at 14.34 1/2 is the next upside target.
Closes below the reaction low crossing at 13.55 1/4
would confirm that a short-term top has been posted
while opening the door for a larger-degree decline
to mark a mid-winter low, which is due during
February. First resistance is January's high
crossing at 14.32 1/2. Second resistance is monthly
resistance crossing at 14.34 1/2. First support is
last Tuesday's low crossing at 13.64 1/4. Second
support is the reaction low crossing near 13.55
1/4.

April live cattle closed up $1.27 at $114.05 yesterday. Prices closed near mid-range yesterday and hit a fresh four-week high. The key "outside markets" were in a bullish posture for the cattle market yesterday, as the U.S. dollar index was weaker, crude oil prices were sharply higher and the U.S. stock indexes were firmer.The cattle bulls have the overall near-term technical advantage and gained fresh upside momentum yesterday. Cattle market bulls' next upside price objective is to push and close prices above solid technical resistance at the contract high of $116.30. The next downside technical objective for the bears is pushing prices below solid technical support at last week's low of $111.07. First resistance is seen at $114.50 and then at yesterday's high of $115.10. First support is seen at $113.50 and then at yesterday's low of $113.00.

Wyckoff's Market Rating: 7.5.�

Source: VantagePoint Intermarket Analysis Software

Call now and you will be provided with FREE recent forecasts
that�are up to�86% accurate�* 800-732-5407
If you would rather have the recent forecasts sent to you, please go here

March feeder cattle closed up $1.77 at $128.00 yesterday. Prices gapped higher on the daily bar chart, hit a fresh two-week high and closed nearer the session high yesterday. Yesterday's solid upside price action did provide the cattle market bulls with fresh upside near-term technical momentum. Feeder bulls now have the solid overall near-term technical advantage. Prices are in a 3.5-month-old
uptrend on the daily bar chart. The next upside price objective for the feeder bulls is to push and close prices above solid technical resistance at the contract high of $129.95. The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of $124.57. First resistance is seen at yesterday's high of $128.40 and then at $129.00. First support is seen at $127.50 and then at $127.00. �

Wyckoff's Market Rating: 8.0

April lean hogs closed up $2.37 at $94.00 yesterday. Prices hit a fresh contract high again yesterday. The key "outside markets" were in a bullish posture for the hog market yesterday, as the U.S. dollar index was weaker, crude oil prices were sharply higher and the U.S. stock indexes were firmer. The hog market bulls have the strong overall near-term technical advantage and gained fresh upside power yesterday. Prices are in a steepening three-month-old uptrend on the daily bar chart. The next upside price objective for the bulls is to push and close prices above solid chart resistance at $96.00. The next downside price objective for the bears is pushing and closing prices below solid technical support at $90.00. First resistance is seen at yesterday's contract high of $94.52 and then at $95.00. First support is seen at $93.50 and then at $93.00.

Wyckoff's Market Rating: 9.0

EUR/USD

The dollar was unable to make renewed gains against the Euro during Monday and gradually weakened to test important support levels close to 1.3750.� Although tensions surrounding the Egyptian protests continued, risk appetite stabilised and this dented any safe-haven demand for the US currency. There was also persistent reports of sovereign buying which underpinned the Euro, especially with evidence of month-end demand.

The US personal spending data was slightly stronger than expected and there was also a very strong reading for the Chicago PMI index which rose to a 20-year high of 68.8 from 66.8 the previous month. There was, however, a subdued reading for the core deflator inflation reading which maintained expectations that the Federal Reserve would maintain a very accommodative policy. Yield spreads against the Euro have stabilised, but the dollar's position is still significantly weaker than at the beginning of 2011.

The Euro-zone flash inflation estimate rose to a 27-month high of 2.4% for January from 2.2% previously as energy costs rose. The firm reading maintained expectations that the ECB could move closer to increasing interest rates at Thursday's council meeting and the Euro maintained support on yield grounds.

There will also be speculation that EU leaders can move closer to a deal on increasing the Euro-zone bailout fund at a summit of Friday which will also provide near-term Euro support. There will still be fears over internal divisions and sentiment will be prone to a sharp reversal.�

Source: VantagePoint Intermarket Analysis Software

Call now and you will be provided with FREE recent forecasts
that�are up to�86% accurate�* 800-732-5407
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Yen

The dollar was unable to gain any fresh buying support on Monday and dipped to test support below 82.0 on Tuesday, the weakest level since the first week of 2011.

The official Chinese PMI index did decline to 52.9 for January from 53.9 the previous month, but there was a further increase in the prices component which may trigger fears over a further tightening of Chinese monetary policy. Overall risk appetite stabilised, however, which should have lessened any defensive demand for the Japanese currency.

The domestic data recorded a decline in average earnings for the first time in 8 months which will maintain fears over the outlook for consumer spending. There will be the risk of Finance Ministry verbal intervention and semi-official buying by the Postal Savings fund.� Nevertheless, the dollar was trapped below 82 in Asian trading on Tuesday.

Sterling

Sterling found support below 1.59 against the dollar during Monday and advanced strongly to a 10-week high around 1.6070 during the Asian session on Tuesday.� There was strong Euro buying on the crosses which helped underpin the UK currency while there was stop-loss buying against the dollar. Sterling also benefited from an improvement in global risk appetite.

MPC member Weale stated that it was preferable to raise interest rates slightly to control the inflation risks. These comments were not surprising given that he had voted for higher rates at the January meeting, although he also cautioned that pressure for higher rate would fade if the economy weakened.

Futures markets were pricing in around a 50% chance of a rate increase by May and the PMI data will be watched closely over the next few days to assess economic conditions. Volatility is liable to remain high with interest-rate expectations also likely to shift frequently on conflicting growth and inflation pressures.

Swiss franc

The Euro found support below 1.28 against the franc and rallied to a high near 1.2950 as risk appetite improved. The US currency was unable to gain any traction against the franc and dipped sharply to lows below 0.94 before recovering some ground.

There will be reduced defensive demand for the franc if international risk appetite continues to improve, but there will still be the risk of volatile movements.

There will be unease that franc strength will damage the Swiss economy and there will be some continuing pressure for National Bank action to curb currency strength.

Source: VantagePoint Intermarket Analysis Software

Call now and you will be provided with FREE recent forecasts
that�are up to�86% accurate�* 800-732-5407
If you would rather have the recent forecasts sent to you, please go here

Australian dollar

The Australian dollar found support below 0.99 against the US currency during Monday and rallied steadily towards parity as the US currency remained under pressure.

The domestic data offered no support for the currency with the PMI manufacturing index remaining below the pivotal 50 level while there was a decline in the latest NAB business confidence index.

As expected, the Reserve Bank of Australia maintained interest rates at 4.75% following the latest policy meeting and there will be expectations of a neutral stance in the short term as the bank called the current situation comfortable. Wider US vulnerability allowed the Australian dollar to move above the parity level on Tuesday.

Disposable personal income (DPI) and personal consumption expenditures (PCE) increased in December, the Bureau of Economic Analysis reports. The update marks the sixth straight monthly rise in PCE and the third consecutive gain for DPI. In other words, if you're looking for a reason to doubt the revival in consumer spending of late, you won't find it here.

Consumption's 0.7% jump in December (the second-highest monthly gain in 2010) was largely driven by an acceleration in the purchases of goods rather than services. Goods-related PCE rose 1.2% in December, up from November's 0.3% gain. Services-related PCE increased by a relatively spare 0.3% last month, about the same as November's pace. Does the faster pace in goods-related purchases reflect growing consumer confidence? Or is it simply a temporary change bound up with the end-of-the-year holiday shopping?

One reason for thinking that sentiment may be improving for more than seasonal reasons can be found in the rise of private wages, which advanced 0.3% in December, up from November's 0.1% rise. On an annual basis, private industry wage/salaries continue to increase at a 4% rate, the fastest in three years. That's still well below the 6%-8% pace set back in 2005-2007, but apparently it's high enough to keep consumer spending forging ahead.

Another sign that higher consumer spending is more than a glitch is the ongoing drop in the personal savings rate, measured as a percentage of DPI. Last month, the savings rate fell to 5.3% from 5.5% in November. In fact, the rate's been dipping for most of the last six months. In June, the savings rate was 6.3%.

Still, the holiday factor can't be ruled out just yet. As Bloomberg reports, Retailers 2010 holiday sales jumped 5.5% for the best performance in five years, according to MasterCard Advisors SpendingPulse. Impressive, but it's debatable if the holiday gains will endure or evaporate in January and beyond. It's tempting to assume that the good news will travel, but it's hard to take anything for granted when the labor market's rebound remains sluggish.

The outlook for the January payrolls report (scheduled for release on Friday, Feb. 4) calls for more of the same. Private non-farm job creation is expected to rise by a net 163,000 in the government's update, based on the consensus forecast of economists via Briefing.com. That would be an improvement over December's meek 113,000 advance, but we're still a long way from a strong recovery in job creation. Until and if that changes, one can only wonder if the rebound in wages, which is essential for elevating consumer spending, can hold its ground.

What are the long-term Fibonacci retracement levels to watch on Crude Oil? Did you know that oil is pushing right up against a major Fib level right now?

Let’s take a look at monthly Crude Oil to see this level and what the larger IF/THEN possibilities are at this time:

A quick long-term look traces the simple Fibonacci Retracement tool from the mid-2008 high at $147.90 to the late 2008 low at the $35.30 level �" a significant and devastating move for oil during the worst of the 2008 recession/bear market.

Price paused nominally in late 2009 at the 38.2% level then rotated around that level through 2010, and recently the price has moved up to the 50% retracement at $91.64.

We’re seeing a similar pause at the $92.00 level �" which is simply the ‘halfway point’ from the peak to the low.

I mentioned in a prior post about comparing structure of the S&P 500 and the Dollar (in terms of intraday divergences) and this is the same logic, comparing the S&P 500 and Crude Oil at key overhead long-term price levels.

Namely, the S&P 500 is coming up against 1,300 which is a simple ’round number’ and the far-ago prior price swing high (resistance) from August 2008.

Oil and Stocks are positively correlated and are both bumping into intermediate term resistance levels.

Thus, we would expect both markets to shatter up through their resistance together, or pause/retrace down at least temporarily here to some extent.

It is another way you can use simple Inter-market Analysis to see if one market confirms the other �" or is facing a similar challenge or pattern/signal.

This is the type of logic I use in my weekly Inter-market Reports to members where I discuss the monthly, weekly, and daily charts of the 10-year Treasury Note, S&P 500, Gold, Oil, and the Dollar Index.

By doing this, you develop your own “Inter-market Thesis” of Cross-market structure and potential opportunities �" and helps you see the bigger picture better than any single market.

As price comes into a major level, the “Will it Break or Hold” game begins, which allows for short and intermediate term opportunities �" and risk management �" at these levels.

For the S&P 500, the intermediate upside target changes to 1,450 and for Oil, if its similar resistance breaks, we could see a push to the 61.8% retracement level at $105.

And if sellers take these markets lower, there are plenty of potential downside support targets �" namely from the weekly price and EMA levels in both markets along with earlier potential support via the same structure (EMAs) on daily charts.

We never know what the future holds �" but we develop IF/THEN game-plan style ideas that we can trade/manage according to our risk tolerance/goals as new information comes in each day and week.

Corey Rosenbloom, CMT
Afraid to Trade.com

Despite today's weakness, Silver Wheaton Corp. (NYSE: SLW) continues to act well off of last week's low at 28.85.

insert.a.chart.SLW

All of the action in SLW looks like it is morphing into a rounded base-like pattern that has the potential to propel prices towards 34.00, if the price structure climbs and sustains above key near-term resistance at 31.60/70.

DJIA Industrial Average

Jan 31

Open: 11824.76

High: 11891.93

Low: 11817.88

Close: 11891.93

Change: +68.23 (+0.58%)

RSI: 68

MACD: 118

Strategy: The US markets posted some solid gains on the back of improved commodity prices and rising crude on Dow after being inspired by some positive earnings surprises. Market may hover near these levels for some more time, till they breach breakout hurdles and push towards a bull run in near future.

Commentary

The stocks in US closed with some healthy advances despite continued geo-political tensions in Egypt after the markets cheered some healthy earnings from Dow components and rising crude and commodity prices. The markets are showing signs of consolidation before moving towards a major bull rally on Dow.

At the close on Monday, the Dow Jones industrial average advanced 68 points, or 0.56%, to 11,892 and the S&P 500 index added 9.8 points, or 0.8%, to 1,286. The Nasdaq Composite closed higher by 13.2 points, or 0.5%, to 2,700.

Advancing Sectors included Energy (+2.6%), Materials (+1.6%), Financials (+1.0%) and Industrials (+0.9%).

However, the only laggard amongst the sectors was Consumer Staples (-0.3%).

Amongst the Dow components, Alcoa 2.73%, Exxon Mobil 2.14%, IBM 1.75% and Chevron 1.67% advanced smartly in the session.

However, the Dow components to shed weight in the session included Proctor & Gamble -1.67%, Wal-Mart -1.11%, American Express 1.08% and Johnson & Johnson -0.40%.

At least 22 Dow stocks advanced in the session, while another 7 stocks closed lower Monday.

The Chicago PMI came in at 68.8 for December, which was its best reading since 1988.

Elsewhere, Personal income for December increased 0.4%, which is slightly less than the 0.5% increase that had been expected. Personal spending during December increased 0.7%, which is greater than the 0.6% increase that had been widely anticipated.

Intel finished flat after participants assessed news that the firm discovered a chipset error. However, the company maintained a higher revenue guidance. But shares of rival AMD shot up more than 4.5%.

In an M&A deal, Massey Energy was acquired by rival Alpha Natural Resources in a $7.1 billion deal on the weekend. Shares of Massey jumped 9.4%.

Meanwhile, investors also cheered the positive earnings earlier released by Exxon Mobil.

The dollar fell against the euro, the British pound and the Japanese yen.

Gold futures for April delivery fell $7.20 to $1,334.50 a troy ounce.

Oil prices extended their recent climb to a two-year high of $92.84 per barrel following the unrest in Egypt.

The Day Ahead

Tuesday

Motor vehicle sales for Jan

ISM Mfg Index for Jan

Construction Spending for Dec