The Institute for Supply Management’s factory index fell to 51.3 in March from 54.2 a month earlier, thus providing an easy reason for the U.S. stocks to sell off this Monday morning, with the JUN13 E-mini S&P 500 coming off 2013 highs, trading down 7 points to 1555.
One key technical level we are watching is 1550. We believe that this is a key line in the sand for this market. If the market can stay above 1550, this week, we believe it is a bullish sign and we look for another leg higher. If this week is a week where the market decides to correct itself and sell off, we look for the next key level of 1538 to be hit. If 1538 is breached, our next level to the downside is 1510. We believe if the market somehow sells off to the low 1500s, it could be a time when longs decide to reload and start to buy again. Continued sovereign risks exist with the Euro region and now Argentina is making headlines.
The main commodities story today (and of last week) is the corn futures market. After the closely watched USDA crop report last week, all major grain markets dove, with corn continuing to fall significantly today, trading down $.42 to $6.52. We believe that the next congestion level below here for corn is around $6.10. We believe corn could be heading there. We have corn’s first resistance level coming in at around $6.80. Soybean futures are down today, but not as much as corn from a percentage basis. However, MAY13 soybeans are below the key $14 level today, trading down $.11 to $13.94.
The Japanese Nikkei is down big today at -3%, as the yen is rising today. This market is trading at around 12115, and we believe the next support level is at around 11600. The Yen is up 91 ticks today to 1.0724, and we believe this market will be in a short term range between 1.04 and 1.10.
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