Many markets are starting off the week in quiet mode. Investors seem to be awaiting corporate earnings announcements and also digesting the fiscal cliff resolution. Forward lookers are also anticipating the next big political event to potentially affect the markets — the debt ceiling dilemma. News of trillion dollar platinum coins float around the media, as potential solutions to a thus far ever-expanding debt situation try to make it seem like everything can be fixed a simple and easy way.
All U.S. stock index futures are in the red today, as the MAR13 E-mini S&P 500 futures are down 6 points to 1451, or -.43%. The MAR13 E-mini Nasdaq is also down today, trading down 4 points, or approximately -.16%. It seems like the markets are taking a breather from the budget deal rally after New Year ’s Day. We still believe the market is very bullish. We would not be surprised to see a march to the 1500 level in Q1. We still have a Nasdaq target of 2900.
Precious metals are also very quiet today, with silver up a hair on the day (+5 cents), and gold futures trading down around $4. After a volatile drop in price for the gold market, we see the potential for a short term range trade to develop between the levels of $1,630 and $1,690. We believe silver is susceptible to another sell-off to the $27 level.
In the energies markets, we have seen crude oil make a very strong comeback from the $80-handle, and it’s now trading around $93 per barrel. Crude was testing the $85 level for a few weeks, and there was not strong enough selling conviction to make another leg down. This rally to $93 seems like short-covering from the base built at $85. We would not be surprised to see crude range-trade from here, or even head lower to $90. Other fundamental news that may also be responsible for the recent rally is the info release that Iran’s crude oil shipments plunged 40% in the last nine months, because of economic sanctions.
We focus more on the euro currency futures for you today. Right after the New Year, subsequent to the budget deal announcement, the U.S. dollar rallied as the euro tanked. The euro basically went from 1.32 to 1.30 in a couple of days, and is now consolidating a bit in the low 1.31s. We believe this market has some important resistance at 1.3150, and very key support at 1.29. We could see the euro take another trip down in price, and possibly break the 1.30 level, in which case we would look for the 1.29 level to be hit. An important ECB meeting this week will most likely cause volatility to come back to the euro and dictate short term direction.
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