Concerns over Chinese economic growth are serving to cause headwinds in the global equity market rally. The JUN13 E-mini S&P 500 futures are down 22 points to 1560. We believe if the market can stay below 1575, the S&Ps can potentially head to the key 1550 level again, and possibly to the 1538 support level. We believe the recent high of 1593 will serve as a medium term swing high level for the S&P futures.
We would not be surprised to see today’s action as the beginning of a short term correction to the 1510-1520 area. We still believe this market still has bullish fundamentals, the Chinese growth story not living up to expectations could start to scare investors into taking profits in the stock market for longer than just today.
Crude oil is continuing its very bearish trading, with this market trading down almost 3% this morning to $88. We believe this market is in very bearish fundamental and technical areas. We think as long the market is below our key pivot level of $92, the next key support level is $85. If $85 is breached, which we think could easily occur, our next target below for crude oil is $82. The Chinese growth data, in our opinion, will greatly drive this market for the near term future, along with U.S. supply data.
The Aussie dollar, tightly correlated with the commodities markets, is also down big today. This currency is down 1.12% today, trading at 1.0336, off from its key resistance level of 1.05. If commodities can keep on their downward path, we believe the Aussie dollar could continue lower.
We focus more on gold today. Gold and silver are having absolutely wild days, with silver trading down more than 10% and gold down more than 8%. We initially had a key target level at $1,410, but the market blew through that, hitting a low so far of $1,356. There are several factors that could be contributing to this massive liquidation: Japanese gold sellers entering the market on relatively high gold prices (before the selloff) to them based on their currency depreciation, tax day for Americans (needing to raise capital to pay taxes), and key technical levels being broken. Our key pivot for the gold market is now $1,450, and the next target/support below here is $1,290. We don’t believe $1,290 will be hit soon, but if it does, we believe this could be extreme oversold conditions.
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