Financial Sector:
On Tuesday, the XLF financial sector ETF dropped 0.13 points (2.80%) to trade around 9.30 (it stood at 26.00 last year). The volume was light; 120,000,000 ETF's changed hands against a rising daily average of 230,000,000. The banking sector was hit by fears that the Stress-Test results from the Treasury were getting delayed because of earnings releases, something that hovered around and negated sentiment on a day of light volume trading. The rout was started in European trade when the S&P futures market imploded and helped to drag all and sundry with it. The Dax, FTSE, and Cac 40 all lost ground in a synchronized move lower in early trade, and each of their financial sectors were hit just as hard as the Wall Street components.

Commodities: Treasuries up, yeilds down, oil down gold up.

Treasuries rose as traders made the move from riskier assets to bonds, and followed the path of least resistance on the day and moved note values higher and yields lower in preparation for the absorption of massive flows of new debt that comes to market on April 8th. The 10 year Treasury yield dropped to 2.89%, the two year moved lower to 0.91%.
Crude oil for April delivery was recently trading down $1.25 (2.50%) at $49.80 per barrel, the second day of +2.50% drops in price.
Gold bullion for April delivery was recently trading up $11.00 (+1.26%) at $883 per ounce.

Dollar Index: Equity Bounce Tests Resistance (Part II)

The dollar traded in risk-aversion mode (higher initially against the higher-yielders and lower vs. the yen) as stocks declined, for the second day, following the trend set in Asian and European trade. On the day, the greenback was trying to hold earlier gains of 1.2%% to the euro, 0.3% against the pound and 0.4% against Australia's currency, as it lost 0.5% on the yen. The Swiss franc was lower by 0.7%, and the Canadian $ held the flat line in late afternoon U.S. trade.
“The dollar index is in a bullish near-term mode right now, and trading on the opposite side of oil and equity momentum, something that may come to an abrupt halt if Wednesday’s Treasury auction of swaths of new debt is not as popular as recent issues, or if equities get a bounce from the Alcoa earnings story in the after-market” said Trade Team members.

“The $ Index technical chart wave structure is still looking bearish in the long term, after the market broke through major support lines at the end of last week around the 85.00” they said. “All that seems to be needed is another period of stocks holding current levels to get things moving lower again, and to reverse the near-term dollar based buying out of necessity. The technical area of resistance on the index sits at 87.00, just above the current price, but we are more interested in seeing the next test of support again at the 85.00 area”.