Reports showed that Chinese manufacturing shrank at a faster pace and the country’s benchmark money-market rate climbed to a record. One of Bernanke’s key statements yesterday addressed the stimulus program: “If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year.”
Equities: The SEP13 E-mini S&P 500 could not stay above our key pivot level of 1643 yesterday, and is down big today, trading to 1595 (down 29 points). We have key resistance levels at 1612, and then 1622 above that. If the market decides to keep going down, we look for our next market profile downside target of 1565 to be approached. However, at this point, there are not any major overtly bearish structures on the profile. Our key profile pivot level is 1614. It seems as though momentum is skewed to more selling. At this very point, we don’t see any glaring set-ups to enter the market.
Bonds: The Eurodollars and bonds have been crushed starting with the FOMC statement, and are having another big down day today. The US 30-year bond futures (SEP13) hit a low of 135’25 this morning, before rallying a point. Even after the rally off lows, the market is still down more than 1 point! There has been major long liquidation over the past 24 hours. The high volume area for the day is 136’21, so this could be a short term magnet level. Key resistance is at 137’11, and then 138’04 above that. Key support zone starts at 135’26. It is a tough call to try to pick bottoms in this market at this point though, so we will wait until we see a “neutral” or normal day in the market profile before trying to identify when the market will start to move sideways.
Commodities: Gold and silver have gotten destroyed along with the bond market. AUG13 gold is down a whopping $77 to $1,297. The initial main target of $1,339 has been crossed, and we would not be surprised to see this market head even lower. One potential downside target from the profile is $1,242. Key resistance levels include $1,315, $1,330, and then the previous target are is now resistance at $1,338. With the U.S. dollar strength, many other commodities are suffering, such as corn, crude oil, natural gas, and copper.
Currencies: The currencies are having a big day as well. The euro is down 78 ticks to 131.97, the yen is down 159 ticks to 102.09, and the Aussie is getting crushed, trading down 163 ticks to 91.18. The euro has been very strong this month, and just recently has begun to change course. A very key market profile support level below the market is at 130.94, or 100 ticks below the current price. The market could potentially trade down there on the bearish momentum of the FX complex. We do believe the euro is still the strongest of the key FX pairs, and would not be surprised to see that support level cause an initial bounce. Key resistance is at 132.35. The Aussie dollar is down huge again, today trading down 169 ticks to 91.12. If this market keeps trading down, we focus on our next downside target of 90.23. Our key short term pivot level is 91.40. The market’s overall trend is down, so we would not be surprised to see more selling to the next target.
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