Many markets this morning experienced whipsaw action, with news of a Cyprus agreement initially providing some positive impetus to “risk-on” markets such as equities and oil. However, once the trading day got started, the major markets reversed course, as review of the Cyprus deal did not provide enough strength for the equity and oil markets to keep pushing higher. To us, it truly seems like the Eurozone debt situation is certainly not over, and could potentially get worse, as more countries debt levels are found to be unsustainable. MAY13 crude oil had a big spike higher once it hit the $95 level, but then quickly sold off to below $94.50.
Natural Gas continues to be on a buying run, with the market trading positive today, almost hitting $4. APR13 Nat. gas is up $.017 today to $3.94. We believe this market has a floor of support at around $3.70, and would not be surprised to see it find solid footing above $4.
The Euro currency is down more than 100 ticks today, with the JUN13 futures trading below 129, at 128.68. We believe from a technical standpoint, the Euro could be ripe for a big down day. We think the Euro could hit 127 very soon, it seems as though the concern over the Euro debt situation might build.
We focus more on the JUN13 E-mini S&P 500. Our big line in the sand for the short term is 1550. This is a big volume level and price level as well. Today, the market punched above 1550 to hit a new 2013 high right above 1560, but then sold off sharply. The Cyprus news was not enough to keep the market higher. The market is now down 9 points to 1543. Since the market is below our level of 1550, we hold bearish views for the short term. We think the market will test its recent low of 1539. If the market stays below 1539, which would potentially occur if the Europe situation gets worse, we see the next target to the downside as 1510.