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FINANCIALS

BOND MARKET RECAP
5/6/2014
June Bonds finished up 0-110 at 136-020, 0-060 off the high and 0-100 up from the low.
June 10 Yr Treasury Notes closed up 0-020 at 124-205. This was 0-035 up from the low and 0-020 off the high.
The Treasury market rejected

the initial slide on Tuesday and spent a lot of time in positive ground. One might
have considered US trade readings bearish toward Treasuries, while some might have simply written off the trade
figures as old data. We have to think that the real driving force for Treasuries ahead will be US Initial Jobless
Claims and the direction of US equities. The first auction of the week provided a boost of roughly 7 ticks in June
Bonds, while Notes saw a rally of only 4 ticks. Some bulls might have bid up Bonds today because of a softer Investor Business Daily optimism Index. The strong start to the trading session for June Bonds was seen as a positive and was later confirmed by a higher close, and a positive technical signal for the short-term trend was
given on a close above its two-week moving average. June 10 Year Treasury Notes opened unchanged, but the close in the upper portion of the day’s range was seen as a positive force and the market’s short-term technical indicators suggest that the trend is positive.
Technical Outlook
BONDS (JUN) 05/07/2014: Rising stochastics at overbought levels warrant some caution for bulls. The close
above the 9-day moving average is a positive short-term indicator for trend. The upside closing price reversal on the daily chart is somewhat bullish. The market has a slightly positive tilt with the close over the swing pivot. The next upside target is 136-210. The next area of resistance is around 136-120 and 136-210, while 1st support hits today at 135-220 and below there at 135-080.
10 YR TREASURY NOTES (JUN) 05/07/2014: The upside crossover (9 above 18) of the moving averages
suggests a developing short-term uptrend. Studies are showing positive momentum but are now in overbought
territory, so some caution is warranted. The market’s close above the 9-day moving average suggests the short-
term trend remains positive. The upside daily closing price reversal gives the market a bullish tilt. The market’s close below the pivot swing number is a mildly negative setup. The next upside objective is 124-275. The next area of resistance is around 124-245 and 124-275, while 1st support hits today at 124-165 and below there at 124-110.

STOCK INDICES RECAP
5/6/2014
June S&P closed down 11.5 at 1864.3. This was 2.5 up from the low and 10.9 off the high.
June S&P E-Mini finished down 11.5 at 1864.25, 17.25 off the high and 2.5 up from the low.
June Dow finished down 84 at 16360, 55 off the high and 25 up from the low.
US equity markets trended lower throughout Tuesday’s session, and were weighed down in part by weakness in
financial-related shares. Concerns that financial firms could come under greater scrutiny by the Department of
Justice sparked a round of profit-taking selling pressure. Another source of weakness in the market was ongoing tensions in eastern Ukraine. Shares of Twitter were down more than 15% after the second post IPO share lockup
expired, and that was a factor that weighed on technology-related shares. Most of the major S&P sector indices were lower, with downside leadership coming from financial and consumer discretionary shares. Market breadth
on the New York Stock Exchange saw decliners outpacing advancers by a 2-to-1 margin into the close. Quarterly results after the close are expected from Allstate, Walt Disney, Electronic Arts and Whole Foods.
Technical Outlook
S&P 500 (JUN) 05/07/2014: A crossover down in the daily stochastics is a bearish signal. Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily closing
price reversal down is a negative indicator for prices. The market setup is somewhat negative with the close under the 1st swing support. The next downside objective is 1848.43. Short-term indicators on the defensive.
Consider selling an intraday bounce. The next area of resistance is around 1874.05 and 1887.42, while 1st support hits today at 1854.55 and below there at 1848.43.
S&P E-MINI (JUN) 05/07/2014: The daily stochastics gave a bearish indicator with a crossover down. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action.
The close below the 9-day moving average is a negative short-term indicator for trend. The daily closing price
reversal down puts the market on the defensive. The market’s close below the 1st swing support number
suggests a moderately negative setup for today. The next downside target is now at 1848.19. Daily studies
pointing down suggests selling minor rallies. The next area of resistance is around 1874.12 and 1887.68, while 1st support hits today at 1854.38 and below there at 1848.19.
NASDAQ (JUN) 05/07/2014: The close below the 40-day moving average is an indication the longer-term trend
has turned down. Momentum studies are trending higher but have entered overbought levels. The market’s close
below the 9-day moving average is an indication the short-term trend remains negative. The daily closing price
reversal down is a negative indicator for prices. The close below the 1st swing support could weigh on the market.
The near-term upside objective is at 3619.31. The next area of resistance is around 3579.12 and 3619.31, while 1st support hits today at 3522.88 and below there at 3506.82.

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