The Commerce Department reported a 2.1% gain in factory orders following a revised 1.3% advance the prior month. New York Fed President William C. Dudley speaks on the economy at 12:30 p.m. in Connecticut. Key jobs reports come tomorrow morning with the ADP release and then the important monthly non-farm payrolls report with the unemployment %.
Equities: The SEP13 E-mini S&P 500 is up 9.25 points today, trading at 1616.25. We are still focused on our 1643 key target level. The market has made a convincing rally from last Monday’s opening sell-off down to the 1550′s. It seems as though investors still want to be long stocks and furthermore may be looking at these levels in the high 1500s and the low 1600s as good spots to load up again on the long side. The U.S. economic numbers have continued to impress as of late, and even though that could convince the Fed to indeed lower the stimulus, overall the market seems to think the economy can handle a lowered stimulus and still perform. 1607 is our key line in the sand.
Bonds: The Bond market is up slightly today, with the SEP13 30yr futures up 10 ticks to 136’01. Our key high volume support/pivot level is 135’27. The short term structure of the market profile looks bullish with an upside target of 137’02. Of course the upcoming employment #’s will likely play a key part in determining the next move in the bond futures. If the #’s on Wednesday and Friday come in weak, we would not be surprised to see a short covering rally to 137. If the #’s continue the recent trend of strong economic performance and surprise to the upside, we could see the 30yr futures go quickly below the key 135’27 level and head lower.
Commodities: The AUG13 gold futures are back down a bit today, after a very big short-covering rally from $1,179 all the way to the high $1,260s. Now, gold is down $6 to $1,250. We believe gold could head lower as the U.S. dollar potentially keeps rallying. We have a key support level for gold in the short term at $1,231. $1,224 and then $1,214 are also key market profile support levels. Crude oil continues to trend upwards, and today the AUG13 crude oil futures are trading up $0.88 to $98.88. We have our next upside target at $99.70, but we actually believe crude oil will head over $100 soon with the issues in the Middle East likely causing the “fear premium” to cause upward price bias.
Currencies: The Japanese Yen has been trending down recently, and today is at a new low for June and July. The Yen is down 64 ticks to 99.67. 99.30 is a near term downside target, and 100.30 is a short term resistance level. If the Yen picks up steam to the downside, it could surprise people with making new lows. However, the #’s out of Japan recently have been better than expected, so perhaps the Yen will stop before making new 2013 lows on this move down. We focus more on the U.S. dollar index. The USD is trading up 26 ticks to 83.52, and has been in an uptrend ever since the most recent FOMC meeting. Ever since the beginning of 2012, the USD has been making higher highs and higher lows, thus indicating an uptrend in that time frame. We believe this trend could continue throughout this year. We look to the key 87-89 region as a potential first target, as the overall trend of higher US interest rates could very well continue.