Morgan Stanley rallied 3.7% as stock-trading revenue bolstered profit, and IBM added 2%. Also, a report today showed fewer Americans than forecast filed applications for unemployment benefits. The Philadelphia Fed’s general economic index increased to 19.8 in July from 12.5.
Equities: The SEP13 E-mini S&P 500 (CME:ESU13) is up 12 points today to 1687.50 as Bernanke has provided confidence to markets that the stimulus policies of the Fed will not be changing or ending this year. At this point, the market has rallied up through our key decision level of 1677.50, and looks like it could make a run to 1700. Recent financial institution earnings have looked very impressive, and this is also providing bullish impetus to the markets today. 1686.50 is the high volume area of the day, while the daily pivot level is 1674.25. At this point some of the recent bears may start to cover their shorts and potentially propel the market even higher.
Bonds: The SEP13 30-year (CBOT:ZBU13) bond futures are down 16 ticks today, hitting a recent high of almost 136. Today this contract is trading at 134’27. We maintain our opinion that the bond market could be a in a longer term down trend, and will likely be very dependent on incoming economic data, especially the next month’s jobs report. This 134’30 level is a recent high volume area in the market profile, and could serve as a short term line in the sand. If the market starts to believe the incoming economic data will be impetus for the Fed to reduce stimulus, then we could see the bonds headed lower to the key support level at 133’16, and possibly lower than that.
Currencies: Several key foreign currencies are down this morning, while the U.S. Dollar Index is up 24 ticks to 83.08. We believe the dollar could rally further to at least 83.40. The Aussie dollar has weakened overnight on weak economic data reports out of Australia. We thought the Aussie was prepared for a short covering rally, but this did not occur because of the economic data released foiled the Aussie dollar bulls ideas. Yen futures are also down below a key level of 100, trading down 102 ticks to 99.42. We have a key support zone at the 98.90 area. 99.88 is a key resistance level at this point.
Commodities: The energy markets are really moving today, with AUG13 crude oil (NYMEX:CLQ13) up to a new 2013 high to $108.04 today, now trading up $1.31 to $107.80. We believe this market could quickly approach $110. Heating oil (NYMEX:HOQ13)is another related market that has been on fire recently, and today is up $.04 to about $3.10. We believe this energy rally might not be over, and believe heating oil could make a run to $3.15. AUG13 gold (COMEX:GCQ13) is up $6 today to $1,283, which is also a key high volume market profile area. We would not be surprised to see gold be in a range trade in the near term future. The grain markets are down overall today, with DEC13 corn breaking below a key $5 level. We believe the corn market could be headed much lower from here.