Analysts project profits at S&P 500 companies fell 1.8% in the latest quarter, the first year-over-year drop since 2009, estimates compiled by Bloomberg show. Upcoming earnings reports over the next few weeks will likely determine whether investors take profits on a huge Q1 stock market rally, or continue to pile on long positions to prepare for a potential continued run higher.
The JUN13 E-mini S&P 500 futures are near unchanged levels since Friday’s close, trading at 1547. We have our next downside support level at 1535, and we believe the market is headed down to that level, and potentially lower. Overall, we still are believers in a longer-term bull market story, but now might be a time when we see investors take profits ahead of a potentially lackluster corporate earnings season. If the first few big companies on the release schedule miss their estimates, we believe investors will be very quick to sell and take profits on a big Q1 rally.
The Nikkei is up big again, this day trading up 215 points, or +1.63%. The yen is down almost the corresponding amount, trading down 1.29% to 101.10. We would not be surprised to see the yen break 100 soon.
In the energy markets, crude oil is somewhat quiet, trading down slightly but near unchanged levels from Friday. Crude is down $0.17 to $92.51. We have $94.50 as a key resistance level, and we believe the $92 level is very critical. If crude can break below and hold below $92, we could see a significant down move to the mid $80s.
We focus more on Soybeans today. After a nice sized sell-off toward the end of March, Soybeans almost hit the key level of $13.50, which is approximately the bottom of their four-month range. The MAY13 soybeans are up $0.10 today, trading at $13.72. We have the next key resistance at $14.25, which is about the middle of this four-month range.
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