Sales of existing homes unexpectedly fell 1% to a 4.94 million annual rate last month, while Johnson & Johnson’s 2013 profit targets missed analysts estimates to the downside. Both of these factors are likely suspects in causing some light selling taking place in the U.S. equity markets yesterday. The MAR13 E-mini S&P 500 futures are hovering around unchanged levels today. According to more than 11,000 analyst estimates compiled by Bloomberg, profits in the benchmark gauge are forecast to exceed $1 trillion this year, or 31% more than when the gauge peaked. As we have stated, we believe the S&P is indeed on track to hit 1500 in Q1.
The U.S. bond market is actually having a nice rally this morning. This is interesting as the stock market isn’t quite going down today. However, we believe this is likely due to the BOJ’s stated policy of open-ended asset and bond purchases in their endeavor to stimulate the economy. The U.S. jobs report issued the first week of February will be very interesting. If the number is much higher than the market expects, we believe this will have a very strong impact on both the stock and bond futures markets.
Some soft commodities were really moving yesterday, such as coffee and cocoa. Coffee was down a whopping 4.38%, while cocoa was down 3.28%.
We focus more on RBOB gasoline futures today. RBOB had a massive rally starting in June 2012, then starting to experience a range trade between approximately $2.85 and $2.60 since hitting a recent high in September. Just today, we notice that RBOB has broken above a key multi-month resistance line, and is trading up $.026 today. Our next upside target for this market is the $2.95 level. The recent trend looks strong to us, and we would not be surprised to see RBOB gasoline futures (MAR 13), head to $2.87 and then possibly $2.95.
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