The NAHB/Wells Fargo Housing Market index surged to 52 from 44 in May, easily topping forecasts for 45. It was the first time the index has been above 50 since April 2006. The Fed will hold its two-day policy meeting beginning tomorrow.
Equities: The SEP13 E-mini S&P 500 is trading up 18 points this morning on not only a great housing market index number, but also possible expectations of a dovish Bernanke on Wednesday. Our key market profile pivot line is 1629. If this market stays above this key level, we have our next upside target at 1667. We believe this next move is very dependent on Bernanke’s policy statement this week. If he is uses dovish language, indicating the Fed is keeping its stimulus program until the unemployment #’s actually warrant a change, we could see this market have a big relief rally. However, if Bernanke echoes some other Fed member’s sentiment that stimulus could be tapered over the next few meetings, we could see both the stocks and bonds (and commodities) drop.
Bonds: The SEP13 U.S. 30-year bond market is down 8 ticks this morning, trading at 140’03. Again, this market awaits a very important policy statement by Bernanke on Wednesday. The bonds look to us to be in a downtrend, and are currently in a small corrective move. Our key monthly pivot level on the market profile is 139’12. If the bonds can stay above this level, we could see a short covering rally especially if we get a dovish Bernanke. However, if the bonds get below 139’12 again and rebuild some bearish momentum, we have our next downside price target at 136’09.
Commodities: AUG13 gold is down $5 to $1,383. Our key resistance level on the market profile is $1,398, and then $1,385 below that. If gold can stay below $1,398, we look for another leg down to the high $1,330s. If gold can rally above $1,398, we believe gold can go a bit higher to $1,410. We are also watching the corn market, as that has picked up strength this morning after a recent multi-week down turn. Crude oil is somewhat quiet today, still holding to its recent bullish tone, trading up $0.14 to $98.02
Currencies: The U.S. dollar has reversed course in June, trading down to 80 from 84. Today, it is up slightly, with the Aussie dollar down 31 ticks and the yen down 59 ticks against the USD. The euro has been very strong and is actually up today, trading up 2 ticks to 133.48. The Aussie dollar has a key support zone from 94.40-94.60, it is currently trading at 95.02. It has a market profile resistance at 95.30. We believe the Aussie is in a downtrend and just in a consolidation phase currently.
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