As pending home sales fell in February, the US stock market is down slightly this morning, with the JUN13 E-mini S&P 500 just above our key pivot level of 1550. This market is trading down 5.5 points to 1552. We believe 1550 is a very important line in the sand for this market right now. If the bulls can keep this market above 1550, we believe there could be a short covering rally to 1570, and new longs potentially not wanting to miss a next leg up have potential to bring this market even higher.
However, if the market can’t stay above 1550, we believe this will be a bearish technical signal for the short term and we would not be surprised to see the market head back toward 1538, and then perhaps to 1510. A sell off to 1510 might occur if there is some acute negative political news out of Europe. Otherwise this market seems very strong.
Precious metals are again fairly quiet, with APR13 gold trading up $7, while Silver is trading down $0.12. We believe the metals are kind of stuck in a range because of conflicting forces – other countries of the world enacting stimulative monetary policies, whereas the U.S. Fed members are discussing potentially winding down QE at end of this year. We think gold will not hit new highs this year and might head lower to the $1,500 mark.
Natural gas continues to be a major bull story, trading up again today, this time hitting the $4.05 level. We believe in this market going higher, possibly approaching $4.20 before starting to consolidate. Crude oil, after a solid rally over the past few days, is taking a breather, trading down just $.54 to $95.80. At this point, it looks like crude could make a run for $100.
We focus more on the euro currency futures this morning. With recent headlines on Cyprus, the Euro debt crisis is obviously far from “over” thus the euro currency has been in a steady downtrend since early February. Our key resistance level is at 1.30, and then 1.32 above that. We believe in a U.S. dollar rally as a safe haven currency, and we believe the euro could head much lower. Our first target to the downside is 1.26.
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