Morning Coffee. Saturday 2nd April, 2011

Morning review:

America

1. Dow Industrials +0.46%
2. Dow Transports 1.33%
3. SP500 +0.5%
4. Russell 2000 +0.38%
5. Nasdaq100 +0.17%

Comment: Solid rises in the Industrials and SP500. See Technical Commentary below

Europe

1. France +1.64%
2. Germany +1.98%
3. London +1.71%

EWA (Australian Shares ETF traded on the New York Stock Exchange). +1.16%

Australian Dollar closed just below 104 last night. +0.53%. That's a positive for our stock market. This week the Ozzie has broken out above long term resistance in the 102 area.

Looks like we'll have a solid start to our market on Monday.

Technical Comment on the American Market:

1. Current run-up in the Dow Industrials is similar in scale and time to run-ups in June/July 2010.
2. Index is now at February high
3. Negative divergences on RSI and MACD
4. Stochastic is overbought.
5. Volume last night was less than the previous night but still high by recent standards (past two weeks).
6. Market struggling to get past significant resistance.
7. Significant support in the congestion zone (circled

All that adds up to the probability of at least a mild-pullback. The current resistance area around 12390 in the Dow Industrials is significant. If the next night is a big down day - expect further weakness.

The lines of demarcation are clear: above 12400 - very bullish, below 12000 - very bearish.

Fundamental note (from Market Watch):

Volkswagen late Friday reported its U.S. March sales rose 22.7% to 27,176 while first-quarter sales increased 15% to 67,039. "Not only did we enjoy the best Jetta sales month in company history, Volkswagen experienced the best overall sales month since 2004," said Mark Barnes, chief operating officer of Volkswagen of America.

Car sales are a good indicator of consumer confidence. That's something that's been missing from the economic picture in America.

Seasonality note. The first week of April tends to be strong. If that pans out, the market could punch right up through resistance - very bullish.

Do your own research. Don't take any notice of what I say. :)

Good luck

Red