After the digestion of not only the initial FOMC rate announcement, but the Bernanke commentary in the afternoon, the big story is actually the bond market. The E-mini S&P 500 futures (DEC12) are slightly above unchanged while the U.S. bond market is down today. In addition to the U.S. 30-year bond futures trading down .38%, we are also watching the various months of the Eurodollar interest rate futures contracts as indicators of how the market is digesting the FOMC commentary. Eurodollars expiring in 2015 and 2016 are taking the biggest hit from sellers this morning, perhaps indicating that the market is getting more poised for higher growth.
Coffee and sugar futures continue their recent bearish moves. Coffee has broken below the very important 150 level, and sellers look to be very active below this level. Sugar futures have also continued their bearish activity below the very key $0.19 level. Sugar is trading down almost 1% today.
The biggest movers in the commodities sector are the precious metals this morning. In an interesting development, even with more QE promised by Bernanke, gold and silver are down significantly today. Silver is down a whopping 3.3%, while gold is down below $1,700. The next support level for silver is right below $31.
We focus our analysis on gold futures for you. We are very focused on how gold reacts around the $1,680 level. To us, this is the key pivot for this market. Gold still has a bullish look to it technically, mainly focusing on the upward trendline from July still intact. However, gold has been bearish since its test of $1,800. If gold can get to and stay below $1,680, we will look for $1,630 to be hit. Even though Bernanke increased bond purchases (more QE), we believe gold is selling off because of positive economic data continuing to come of the US (retail sales and jobless claims were both bullish equities).
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