A disappointing earnings report from Bank of America is a main catalyst for the U.S. stock market sell off today.
Equities: The JUN13 E-mini S&P 500 is down 23.5 points to 1545. This market is now below our key pivot level of 1550. Considering this, along with the approaching notoriously bearish month of May, we look for the S&P 500 to stay below its recent high of 1593, and possibly head to 1523.75. The real key level below 1550 is 1533, that is a huge support level. Our next target level below here is 1523.75.
Bonds: The U.S. 10-year note futures market is up slightly to 133’04. We are continually interested in the lack of volatility in this market. Even with the S&P 500 down 1.5%, the 10-year is up only .14%. Perhaps this means the market, as we have noted previously, is already filled with long positions, and new buyers are nervous to enter, especially in front of the Fed minutes scheduled for release today, which could further indicate a slowing of QE later this year.
Commodities: Gold and silver are relatively quiet today, with gold at unchanged levels from yesterday’s futures close, and silver down a shade more than 1% to $23.35. We believe this market is still in a bearish environment, but after such a selling avalanche, we could experience a short term period of low volatility in gold and silver. Natural gas is holding steady in positive territory. Today the key pivot/support level is $4.04. We believe that the natural gas market above this level is very bullish, and could approach the prior high of $4.30 very soon.
Currencies: The British pound and the euro (and Aussie) are all down today. The Euro is down the most of the three, trading down 140 ticks to 130.56. We believe the euro is more bearish than bullish, and if the U.S. stock market continues to go down into May, the euro may follow with it. The Aussie dollar is down 73 ticks, mainly due to the commodities slump. The British pound hit a very key resistance level at 1.54, and bounced off that, and is now down 114 ticks to 152.49. We could easily see the pound heading lower to 1.51, as the BOE may continue to provide more stimulus to the UK economy.
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