U.S. equity futures started the day on a corrective note, with the major indexes in the red. Corporate earnings will begin to be released this week starting with Alcoa, and the equity futures markets are pulling back in an orderly retracement from the strong rally after the first of the year. The MAR13 E-mini Nasdaq is down 14 points, while the MAR 13 E-mini S&P 500 is down around 8 points. Conversely, the U.S. bond market is also retracing part of their recent sell off today, with the 30-year bond futures trading up .4%. This will be a very interesting month. The classic trading wisdom dictates that, generally speaking, strong markets will still generally go up, even on bad news. We believe the equity markets are strong. Thus even if corporate earnings are around neutral, we still believe the S&P’s major target is 1500. With that said, it will be very interesting to see how the markets digest the uncertainty of the forthcoming debt ceiling issue.
In Japanese markets, the yen has finally stopped falling (for now), and has started to make a slight retracement of its massive multi-month drop. The yen is up .84%. The Nikkei has also retraced part of its massive corresponding rally today, trading down 1.74%. Our major resistance level in the yen is 1.18.
We believe a rising U.S. dollar my cause headwinds for any hopes of a major commodities rally in Q1. We believe, as previously stated, gold futures will perhaps be in a short- to medium-term trading range between $1,630 and $1,690. We believe corn futures will potentially be in a short-term range between $6.80 and $7.00.
We focus more on the MAR13 E-mini S&P 500 futures for you. Even with today’s orderly retracement, we believe the overall tone of the U.S. equity futures markets is bullish. We note two major support points on the chart: 1420 and 1390. For several months, we have noted that our major pivot area for this market is 1420-1430. Corporate earnings announcements likely will dictate whether this market heads lower to test 1420, or rushes up beyond the 2012 highs. We should have a very clear picture within the next 10 days. Our key multi-month upward trendline is still intact, and the market is relatively far away from the line. Thus we propose a bullish tone for the market. 1480 is our first upside technical target for this market.
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