The Standard & Poor’s 500 Index looks to be headed for its eighth record in the past nine sessions on increased confidence in U.S. banks coupled with investor confidence over the future of the U.S. economy. The U.S. dollar continues its strength.
Equities: The JUN13 E-mini S&P 500 continues its incredible 2013 run this morning, trading up 14 points to 1645. Our key technical target of 1640 has been hit today. We believe there could be some profit taking action if the market pokes above 1650. Overall, we continue to hold bullish views on the U.S. stock market. We also believe that the bond market is susceptible to losses, and it will be interesting to see if a lot of that bond money goes into equities, thus propelling the markets even higher toward the end of this year. The JUN13 E-mini Nasdaq has traded up through 3000 this morning, and is now trading at 3002. Our short term technical target for this market is 3050. Ultimately, like the S&P, we think the Nasdaq will march higher this year. U.S. economic numbers are looking good, and there still is a lot of money not in the stock market that could eventually find its home in equities.
Bonds: We hold bearish views of the bond market. The U.S. 30-year bond is down six ticks today and trading on its lows. Our next target for the U.S. 30-year bond market is 141. That is what we are focused on. It might not happen in the very short term, but we believe the bearish pressure in the bond market is building.
Commodities: Crude oil is slightly lower on the day, trading down $0.16 to $95. Crude is still holding up fairly well, especially in light of the U.S. dollar rally. Gold is down $6 today, seemingly more affected by the prospect of higher rates and a stronger US dollar. We would not be surprised to see gold approach $1,400. JUN13 corn futures are down 1% to $6.50 after a sharp rally to $6.60 yesterday.
Currencies: The Aussie dollar and the Japanese yen are both down today, with the Aussie down 52 ticks to 98.78, and the yen down below 98 to 97.84. We believe these markets are close to a very short term swing low and may consolidate a bit from here. However, the trend in the U.S. dollar could truly just be beginning.