U.S. equity markets are trading lower at the mid-session after spiking higher following a better than expected U.S. Retail Sales Report. After the release of this number it’s been downhill all the way as buying has dried up and the profit-taking has gotten a little more aggressive.

The trend hasn’t turned down, but the indices are in position to post bearish closing price reversal tops. This could lead to the start of a sizeable retracement next week. The March E-mini S&P overshot its upside target today at 1156.00 before selling off. This excessive volatility appears to be more than the market could handle at this time after 10 consecutive higher closes. The inability of the Dow to take out the January high at 10687 has created a divergence between it and the NASDAQ and S&P 500. This is another indication of a possible top formation.

At first, demand for risk pressured the June Treasury Bonds, but this market has recovered since the U.S. equity markets weakened. Once again the inability to break the low of the week at 115’27 triggered a short-covering rally. Technically, this market is forming a closing price reversal bottom which could lead to the start of a short-term retracement rally.

April Gold tried to rally after the Dollar opened weaker, but the mid-session comeback in the U.S. Dollar is now applying pressure on gold. The current downside momentum is likely to trigger a further decline to the recent bottom at $1088.50. A break through this price will turn the main trend down so the bulls are likely to mount a strong defense following a test of this level.

June Crude Oil is in a position to post a daily closing price reversal top. Demand for higher risk assets appears to be drying up which is helping to trigger the sell-off. The daily chart indicates that this market has plenty of room to the downside.

After trading sharply higher overnight due to a technical breakout to the upside, the March Euro is trading flat. The Euro traded sideways to lower following a report that showed U.S. Retail Sales increased more than expected in February. After reaching a low at 1.3727, the Euro began to rally following a less than stellar consumer confidence report. Since then the Euro has traded sideways-to-lower, but has managed to hold on to its overnight gains. Technically, the main trend is up on the daily chart with 1.4009 a possible near-term target.

Most of the strength in the Euro this week can be attributed to the easing of the financial crisis in Greece as well rumors of a possible $50 billion bailout by France and Germany.

The March British Pound is trading better at the mid-session. Oversold conditions and renewed optimism about the economy is helping to boost prices. This should be looked at as a short-term move, however, as the fundamentals still suggest lower prices are likely. Concerns over the economic recovery, political uncertainty and the lack of confidence in the Bank of England could limit gains or trigger fresh selling after a retracement.

The March Japanese Yen is trading higher after a sharp break to the downside following an early morning spike in U.S. equity markets. Technically, this contract reached a major 50% price at 1.1019 before backing off. The direction of the stock market will dictate the moves in the Japanese Yen into the close. A weaker stock market should drive the Yen higher.

The stronger Euro is helping to underpin the March Swiss Franc. The higher the Euro goes, the stronger this contract should get. The stronger Euro removes the pressure from the Swiss National Bank to weaken its currency through intervention.

The weaker Dollar and early demand for higher risk assets helped drive the March Canadian Dollar through the October top at .9795. At first traders approached this price level with caution out of fear of an intervention by the Bank of Canada. The BoC has been quiet however, due to the fact that the strength in the Canadian Dollar is being driven by economic reasons rather than speculation. Upside momentum is building which could send the Canadian Dollar to parity with the U.S. Dollar. It’s not suggested to get aggressively long at current levels since there is still a chance the BoC may intervene.