Global commodities and equity markets are taking a tumble this morning. U.S. new home sales came out below expectations as deep concern builds over the U.S. fiscal cliff situation. December ‘12 E-mini S&P futures dropped on the news before regaining ground. The 1385 level is a key support area we are watching in the S&P 500. If the market close below this level our next potential target is at 1310.
In other major commodities news, natural gas futures continue their major volatility expansion, trading down almost 2.5% today. Crude Oil futures are also experiencing heavy selling, down nearly 2%. We are firm in our opinion that we will see $82 in crude oil as the supply glut gains stronghold on the market.
Precious metals are a big story as gold spiked $25 lower on the open. Silver futures, while not experience as sever a spike, are down more percentage-wise, trading down 77¢, or 2.27%. Platinum futures are also below the key $1,600 level, down 1.85% at $1588.
We maintain our bearish outlook on Sugar futures. Our key support level is 19¢, which has served as a floor since the summer. We believe sugar will break below this key $19 level as global economic concerns weigh on demand, along with increased sugar supplies.
December ’12 E-mini S&Ps have been below our key 1420 pivot almost all of November;1385 is another very important pivot level. If 1385 can serve as a base, we could see a slow grind back up to 1420. However, if a U.S. slowdown story gains momentum we could see this market stay below 1385 and head towards 1310, with interim support around 1340.
We see an interesting scenario developing in the sugar futures market. Since June 2012, the 19¢ level has served as a solid support. Sugar tried multiple times, but has not been able to settle below 19¢ for more than one day. Sugar looks like it could break below 19¢ this time and head lower. The next major support level on a weekly chart is 15¢. On the fundamental side, Brazil’s center-south region, the world’s largest producer of sugar, churned out 1.74 million tons in the first two weeks of November, up 37% from the same fortnight last year. But first sugar must close below 19¢.