Bill Cara’s Blog for March 8, 2010 [See post-close report]

Morning Call [9:10am ET] While many analysts are pointing to recent up-ticks in global equity markets as a clear sign of economic recovery and blue sky ahead, some others, myself included are recommending that we need to see a whole short-term cycle play out before we make a Bull call.

CitiSecOnline analyst JG Barredo in the Philippines is one of the analysts I follow. This morning his comments were as follows:

· Global indices again showed mixed reads but some major indices in the US and Europe have firmed up to try to break recent highs
· Although markets are encountering resistance, momentum reads still portray some leftover strength and may give us something to watch over into the upsides this week
· Do however watch overbought signals as some indices are coming close to being a little too stretchy
· The consolidation phase proceeds but with rallying forces showing even more strength; this should allow for trading buys to proceed, particularly after reactions to closer to support that show higher-low bases or those showing recovery action near the 16-day MA if it is nearby
· If resistance highs break then we shall upgrade the trend status back into an advancing wave – looking for upward channel action to serve to guide our trading buys

In other words, markets look promising, but don’t get trapped. Wait a couple days, and if break-outs continue all over the board, then be a follower.

Today I will be back at the PDAC convention in Toronto. One of the highlights this year, which I forgot to report last evening, is the new mining industry-wide focus on iron ore. As I see it, a focus on iron ore means the people here are looking forward to economic recovery, with the emphasis on steel production.

Overnight trading in Asia-Pacific markets was very strong. Europe, not so much,; however, right at 7am ET, I noted that Silver started to trade higher, faster than the up-tick in Gold, which is an indicator that traders are taking on risk at this point. The Euro has strengthened too. But so far the equity and Crude Oil futures are only modestly firmer.

I’ll be back with the post-close report.

Have a good day.

CTA Trading Desk Post-Close Report

As volume and volatility dwindle to absurdly low levels, traders are wondering what catalyst will jar trading activity back to normal.

After 6 straight up-days it made sense to expect profit-taking to hit the market at some point during the day, but even Bulls must wonder if this tiny move represents a pullback, a pause that refreshes (S&P -0.02%). Short-sellers had their opportunity to drive the market lower a few weeks ago, failing miserably, so the buyers remain in control until lower support is significantly violated.

While the S&P was fractionally lower, both the Russell 2000 (RUT +0.16%) and the Nasdaq (QQQQ +0.15%) eked out tiny gains. High-tech heavyweights Research in Motion (RIMM +5.60%) and Cisco Systems (CSCO +3.73%) attracted the lion share of buying interest today, propelled higher by analyst upgrades and positively received product announcements.

Although Cisco looks a little over extended (RSI 7 daily closing at 92.7 today), Research in Motion has room to motor upward, and may try to fill a gap up around 82 (11.66% above the close Monday).

Gold (GLD -0.87%) took a quick dive in early morning trade as the US Dollar (DXY -0.04%) trimmed its losses, desperately trying to hold the 50- and 89-day Moving Averages. Prices could move either way out of the current sideways consolidation, so it is prudent to remove your forecasting hat, and place the trading cap atop your head.

Preconceived notions of how the market should behave will get traders into a heap of trouble; but patient traders who objectively observe the price action at key levels will be able to hop on board the train as it pulls out of the station, with minimal capital at risk with prudently placed stops.

We can look for a change in trend at some point this month if history is any guide, but recalling the relentless trek higher during the high-tech blow-off move exactly 10 years ago reminds us that just because prices are high doesn’t mean they cannot go significantly higher.

And as we all know, markets can stay irrational longer then we can stay solvent.

Have a great evening.