As Europe fears re-entered the marketplace, the U.S. equities sold off overnight and continue to be retracing some recent gains this morning. The MAR13 E-mini S&P 500 is down 9.25 points, or -.61%. The market is now below the key 1500 level, and might stay below here, waiting for good news to potentially propel it higher. The fact that orders to U.S. factories rose less than forecast in December is also putting a damper on the bulls’ party. Also, as Spanish bonds slumped today, markets are also more acutely concerned about European instability, as corruption allegations against Spanish Premier Mariano Rajoy ruffle the market’s confidence.
Crude oil is also feeling the effects of the “risk-on” sell-off, trading down around $1, to $96.79. We believe crude will experience a range trade in the short-term, after rallying around $11 from its $86 base. RBOB gasoline futures are down around $.02 this morning, after an extremely strong last week. We believe this is simply an effect of outside market action, and not necessarily because of some fundamental change in the RBOB market.
The MAR13 E-mini Dow Jones futures market is also down today, around 95 points, or -.68%. We believe this market has good support at the 13,700 level, and should stay above there in the short term. If more instability is perceived in Europe, this level could be swiftly approached.
We focus more on the MAR13 Soybeans futures contract today. This market had a very strong January 2013, rallying all the way from the bottom of the range at $13.50 to almost $15.00. $15 is the top of the recent range, and soybeans do look strong. Thus, we would not be surprised to see soybeans push through this resistance level and approach the previous congestion area at $15.30-$15.50. Speculation that hot, dry weather in Argentina and rains in Brazil will curb supplies of the oilseed has caused traders to buy this market.
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