The S&P 500 climbed yesterday to within two points of its record closing level of 1,565.15 set in October 2007, but today has retraced some recent gains. This morning, the Thomson Reuters/University of Michigan preliminary sentiment index for March fell to 71.8 from 77.6 in February, while it was predicted to rise to 78. This was an easy impetus for some profit-taking on the 10-day rally in U.S. equity markets. Industrial production rose more than forecast in February, further supporting the thesis that the US economy is truly recovering.
The big recent stories in the commodities markets are cotton and natural gas. Both markets have been on a bullish run recently, and today is no different. APR13 natural gas is up big again today, trading up to $3.91, or up 2.7%. Natural gas inventories took an unexpected dive recently, and The National Weather Service’s latest forecasts, spanning March 19-27, show below-normal temperatures coast-to-coast across the northern half of the nation. We believe the $3.75 level could serve as a floor for this market going forward.
Crude oil continues to steadily climb up from the $90 level. Today APR13 crude is trading up $.36 to $93.38. It looks like it is approaching short-term overbought levels, and we would not be surprised to see crude approach $92 to the downside in the near term.
We focus our technical analysis on the JUN13 E-mini S&P 500 market. We have a drawn a key red resistance line on the accompanying chart. This is an important multi-month line which connects the highs of this market since the beginning of February 2013. Throughout March, the market has hugged this line but could not find the strength to go through it. Today, the market has bounced off it once again and now is trading down around 3 points. At some point, we believe the market will break through this important line, but at this point, we could see the market selling off and retracing back to the 1530-1540 area.
Click to enlarge.