As the markets and country (and world) await President Obama’s State of the Union address tonight, we are seeing equity markets remain subdued this morning. With that, the S&P 500 is up again today, with the MAR13 futures trading up another 4.5 pts, or +.28%. We continue to believe that 1530 is the next major upside target, and we believe the market will hit this level soon. Even though many strategists have been calling for a 5%-7% correction, we are not in that camp. We believe that a significant correction might occur if and when the S&P 500 hits 1550, and even then, we are not focusing on a significant correction occurring because that is pure speculation as to the size and timing of it.
The U.S. bond market is down today, especially as the stock market is rallying again. The benchmark 10-year Note futures market is down 7.5 ticks, and we believe this market is headed much lower. We believe the 10-year Note will head towards a yield of 2.4% this year, and now it is still a touch above 2%.
Sugar futures are one of the biggest losers on the commodities board today, trading down 1.84% at $0.1810. Cotton is also retracing some of its recent gains, trading down 1.65%.
We focus more on the corn futures market. Ever since the huge drought rally last summer, all of the grains markets have been in a downward channel. Wheat is actually leading the way down in the grains markets today, trading down $0.124 to $7.29. Wheat has now broken through the major support level of 2013 and we wouldn’t be surprised to see wheat continue to head lower to $7. Corn futures (MAR13) are also down today, trading below $7 to $6.92. Corn’s major support level is $6.80, and we believe corn will indeed breach that support and head to the next key support level at $6.60. Corn and soybean growing areas in Argentina may receive moderate to heavy rainfall from storms beginning Feb. 16, easing dry conditions, DTN said today in a forecast.
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