The latest setback in talks to avert the U.S. “fiscal cliff” has tempered the U.S. stock futures’ recent rally, and the market is still highly uncertain over the Obama-Boehner negotiations. However, the market is still very interestingly close to 2012 highs, and to us this is still a sign of cautious confidence that the marketplace has. As we have noted, we would not be surprised at all to see a run to 1500 (MAR13 E-mini S&P 500) in the first quarter of 2013.
An extraordinary bout of selling has hit the precious metals markets today, to continue recent bearish trading activity. Silver is down a whopping 4+% today, breaking under $30. We still believe the first major target to the downside for silver is $27. Gold futures have also been hit hard today with selling, travelling down to below $1,640 (FEB13 contract). We see the $1,630-40 area is a key region for gold, and we believe gold could start to slow down its descent in this region.
Another big story in the commodities markets is natural gas. With the big storm hitting the Midwest, natural gas is the biggest mover to the upside in the commodities markets today. Natural gas is up almost 13 cents, with the JAN13 contract trading at $3.45. Another bullish factor supporting natural gas today is a report showing the net natural gas withdrawal was greater that the market consensus. We hold a bullish view of natural gas and believe it will head towards our next target of $3.60.
Corn, on the other hand, has taken a very bearish turn. For the first time since summer, corn has broken below $7. We note that the five-month uptrend support line starting in July has also been broken. Our next key downside levels/targets for corn are $6.80 and then $6.30. $6.30 certainly has potential to be reached. Key fundamental news driving this sell off is a forecast that 2013 acreage would be the largest in nearly 80 years.
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