Mario Draghi, the ECB President, has been known to move markets with his commentary on the state of the Euro-area economy. This morning is no different, as his remarks that inflation will likely be contained as slow growth may persist until later this year has caused the Euro currency to sell off sharply this morning. The Euro futures (MAR13) traded as low as 1.3374, whereas this market hit 1.37 just days ago. Buyers seem to be supporting this market with force below 1.34. Discussions of slow growth plus contained inflation scared some of the bond bears of the world today, with the U.S. 10-year note trade up 6 ticks, or .14%.
Overall, we believe there was no real “new” news today, and that the equity markets are simply in profit taking mode after a very strong January rally. We believe that if the U.S. continues to pump out positive economic data centered on jobs growth and housing growth, we think the S&Ps will rally to new 2013 highs.
Crude oil continues its retracement of part of its recent gains today, with talk of slow growth in Europe making it tough for risk on markets to rally today. Crude is down $.80, or -.83%. However, due to the big storms predicted to hit the East Coast, heating oil futures continue to rally in the face of a risk-on sell off. Heating oil is trading up $.018, or +.59%. $3.40 is our next major resistance level for heating oil.
Gold and Silver continue to trade in extremely tight ranges. We believe gold and silver’s next move will be down, as the world may continue to move more money into equities.
We focus our technical analysis on the MAR13 E-mini S&P 500. 1510 is now the key upside barrier to this market. It has spent around five trading sessions hovering close to this level, and today the bears won the battle and drove the market down to below 1500. At the same time, our uptrend line for 2013 is still intact, thus we believe this market is still strong overall. 1470 and then 1460 are very important support levels for this market. We believe that as long as the market stays above these levels, we are in rally mode.
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