As the ECB’s balance sheet shrinks to the lowest point within the past 11 months, and as corporate earnings continue their overall positive tone, the U.S. equity indexes, as well as energy markets, continue their recent strength.
The privatization of Dell also may be stoking some equity buying as the market gets more confident of more deals to come, and more overall confidence in the health of the economy rises. The MAR E-mini S&P 500 contract is up 11 points today, or +.75%. Our next major target is 1530. The market will keep a close eye on this month’s economic data to see if another leg up to 1530 is justified.
The U.S. 10-year note, after a clear safe haven bid erupted yesterday, is back down this morning, trading at 131’07 (MAR13 contract), or down 9.5 ticks. Our target for the 10-year note yield this year is 2.4%. We believe this yield level could be reached later this year especially if U.S. employment numbers continue their recent trend of higher jobs growth and lower unemployment.
We focus more on the energy markets today. Crude oil is up $.65 today as the markets seem to be in ‘risk-on’ mode. We believe crude has good resistance at the $98 level, but if crude can get above this level, we would not be surprised to see crude make a run for the next big level at $102. RBOB gasoline is having another big day, trading up to $3.04 (MAR13 contract). RBOB looks to slowing down its recent strong rally, but we also believe that this market still has legs and expect it to head higher into the summer.
Heating oil is the focus today. Heating oil has had a strong breakout above the $3.10 level, and is up again today, trading at $3.19. $3.20 looks to be good initial resistance, but like RBOB, we believe heating oil has legs to run more, and our next major upside target is actually at $3.
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