Gold dipped yesterday, yet found strength in the highly psychological $900/oz level. The precious metal is rising as U. S. equities look to open in the red Thursday morning. Hence, we could see a return to the negative correlation between gold and equities today with a bounce in gold long overdue.

Though we are positive on gold in the near-term, the precious metal needs to deal with our 2nd tier uptrend line before it can log any sizeable gains. Volatility has decreased over the last couple sessions, showing investors aren't quite sure whether to continue the uptrend or send gold tumbling into the black hole.

The 30 Year T-Bond futures manage to stay above February lows yesterday and are strengthening Thursday morning as U. S. equities look to open the session lower. Surprisingly, the 30 Year futures remained afloat on Wednesday despite surging equities.

One may have expected the opposite considering the usual negative correlation between the two investment vehicles. Hence, the 30 Year futures may be oversold, and are consequently due for a near-term rally.

Therefore, we are positive on the 30 Year right now with a possible retest of our 2nd tier downtrend line. On the flipside, if the futures do in fact drop beneath February lows, we anticipate a heightened near-term selloff.

The S&P futures posted solid gains yesterday after the government unleashed details of its housing rescue plan and Obama called stocks a good buy. However, investors had little to cheer about data-wise with the ADP Non-Farm Employment change number coming in much lower than expected. Although the ISM Non-Manufacturing PMI was slightly better than expectated, the number was below that of the previous release and still signals economic contraction. Hence, the rally in the S&P futures faded, and the U. S. markets are looking to open lower Thursday morning.

The USD/JPY balanced along our 2nd tier downtrend line, and is surging again to the upside looking to retest the highly psychological 100 area.  The move comes as the S&P futures try to stabilize at 700 ahead of heavily-weighted economic data.

Japan will release its Capital Spending number tonight with analysts expecting a decrease of -15.6%.  If capital expenditure decreases more than expected, signaling lower production, and U.S. economic data comes in line then we could easily see a retest of 100. 

With the Carry Trade unwound, investors are now judging the currency based on the comparative economic health of the two nations.  With Japan faring worse the America, the USD/JPY continues its impressive rally.

The Cable is stabilizing from the psychological 1.40 area and is rising back above our 1st tier downtrend line.  Therefore, we could see some solid near-term gains with a retest of our 2nd tier downtrend line.  The strength of the Cable comes on the heels of a better than expected Services PMI. 

Furthermore, the S&P futures are fighting to stabilize around 700, which in turn is edging the GBP/USD back into the bottom-end of the February trading range.  Don't forget a strong positive correlation exists between the Cable and U.S. equities due to Britain's heavy reliance on the financial sector for GDP growth.

The EUR/USD continued its selloff on Tuesday as the S&P futures dipped below 700. However, the EUR/USD found support on our previous bottom-end support of 1.2458 early Wednesday.

Euro traders are holding onto their breath waiting to see if U. S. equities manage to stabilize from present levels. If this is the case, then 2008 lows could hold for the time being. However, if the U. S. economic data is catastrophic and a sharp selloff ensues, we very well may see the EUR/USD test the patience of October 2008 lows.

The biggest concern for the EUR/USD, not including U. S. equities, is the condition of Eastern Europe. Many of the EU's largest banks have significant exposure to Eastern European economies.