The FOMC releases its minutes report from the most recent policy announcement meeting, and Fed chairman Bernanke also speaks this week, which will likely captivate investors who are looking for clues as to when the Fed might start to taper its stimulus program.
Equities: The SEP13 E-mini S&P 500 (CME:ESU13) is up 10 points today to 1637.25. We have a key level at 1623. The market looks very strong to us, considering it has tried now several times to stay below 1595 and could not do it. So now, we have 1623 as the key pivot level. If the market can stay above this level, we look for first 1644 to be hit, then 1650 to be approached. Ultimately, we do believe the market is headed higher this year. It seems as though the recent expanded volatility and even dip below 1600 was just the market trying to digest the important post-FOMC policy announcement discussion on the Fed tapering their bond-buying program. The economic numbers have been strong and we believe these numbers are the key drivers of the market’s strength.
Bonds: The SEP13 U.S. 30-year bonds (CBOT:ZBU13) are up 19 ticks today on some light short-covering. This market got fairly over-extended as it almost broke the 132 handle. Now it is trading up 133’08. Our key pivot level is 132’26, and if the bonds can stay above this level they could head to the low 134′s. This market will be watching two key data points this week: the FOMC minutes as well as Bernanke’s speech. We don’t think the market will hear anything drastically different this time from Bernanke though.
Currencies: The Aussie dollar (FOREX:AUDUSD) is having a decent short-covering rally from the key 90.00 level. Today this market is up 61 ticks to 90.79. It looks like the 90 level was very good support, and we may be in for more gains. We have our next upside target for the Aussie at 91.38. The euro (FOREX:EURUSD) and the pound (FOREX:GBPUSD) are also seeing gains today against the USD. The U.S. Dollar Index (NYBOT:DXU13) is down 21 ticks to 84.49, while the Euro is up 33 ticks to 128.66 and the Pound is up 31 ticks to 149.24. We are watching the pound closely as we believe this currency is susceptible to more losses against the U.S. dollar. Our key pivot level is 148.90, and our next downside target is 147.10. The pound is having a small rally above this key pivot level this morning. If the Pound can find its way below 148.90, we look for this currency to fall further, potentially to 147.10.
Commodities: AUG13 gold (COMEX:GCQ13) futures are up $22 to $1,234. Our key level for gold has been $1,230, and today the market has found its way above this level. We believe this is due to the recent dovish comments from the ECB as well as the BOE. We also believe gold is in a range trading environment, and might continue to trade back and forth in the mid $1,200s. AUG13 crude oil (NYMEX:CLQ13) has come down from overnight highs this morning, trading down $0.55 to $102.68. Our key support levels for this market are first $101.65 then $101.25. We believe if crude gets down to $101.25, we could see some strong buying re-enter the market.
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