Although Google and IBM both released very positive earnings reports last night, the U.S. equity markets still remain somewhat subdued as the House of Representatives will vote today on legislation suspending the government’s $16.4 trillion debt limit until May 19. The MAR13 E-mini S&P 500 is simply hanging out near its recent highs of just above 1490. 1500 is just one good move away, and we believe there will be a relief rally to 1500 if the debt ceiling limit gets raised. The positive overall tone of corporate earnings this season has contributed a lot to the January rally.
The euro currency also has seemed very strong this month, rallying to the key resistance level of 1.34. We see 1.35 as the next key technical resistance level on the charts, and we also see a potential bullish “reverse head and shoulders” pattern, with a potential upside target all the way at the 1.42-43 area. The markets wait for no one. This analysis may surprise a lot of people, but divergent viewpoints sometimes make for the most interesting action. Nevertheless, our next key level to watch for the euro is 1.35.
In the commodities world, we view sugar as being in a very bearish pattern. Sugar has now been holding below the key level of $.19, and is trading today at $.1821. We would not be surprised at all to see sugar slide down to its key support level at $.15 this year. Strong production and export data from Brazil has dampened sentiment on the sweetener.
We focus more on Natural Gas futures today. Natural gas has bounced very hard off the key $3.10 level, and has been climbing rapidly in the month of January, probably supported by the fear premium induced by the plant takeover in Algeria. We believe the tone of natural gas futures is now bullish, and would not be surprised to see a continued rally to the key level of $3.75. Our two major support points are $3.49 and $3.35.
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