McDonald’s slipped 2.7% after earnings and revenue fell short of forecasts. More than 150 S&P 500-listed companies, including Apple Inc., Amazon.com Inc. and Facebook Inc., report their earnings this week. Data today showed sales of previously owned houses unexpectedly dropped in June.
Equities: The SEP13 E-mini S&P 500 (CME:ESU13) is at unchanged levels this morning, and we believe this market could be in for a profit-taking sell off down to at least 1682, as investors closely watch upcoming key earnings reports to determine their opinions on the market’s direction. We believe that 1677 remains a key line in the sand for this market, and that as long as this market can hold above 1677, we believe it indicates a strong market. But if the market rolls over below 1677, we believe it may be in position for further downside action. 1644 remains a very key downside target for us on any bearish move below 1677.
Bonds: The SEP13 U.S. 30-year bond futures (CBOT:ZBU13) are up 9 ticks to 135’25. We believe the bonds could be in for some more rally action in the short term, with our next upside target area showing up at the mid-136s. As we have been saying, we believe the bond market in particular will be very data-dependent going forward, as the Fed has indicated they are closely watching the employment numbers, as well as monitoring the inflation numbers. Our first important support level for this market is 135’15.
Commodities: The story of today is the big short-covering rally in gold. AUG13 gold futures (COMEX:GCQ13) are up $34 to $1,326. The next key resistance level on the chart looks to be $1,336, which was a prior low. $1,310 seems like support, and then $1,293 below there could also serve as solid support. The energy complex has given back some gains today, with SEP13 crude oil down $.59, and SEP13 RBOB (NYMEX:RBU13) down $.03 as well. SEP13 natural gas has had a lot of selling today, down about 4% as temperature forecasts have moderated.
Currencies: The U.S. Dollar Index (NYBOT:DXU13) is down 39 ticks today to 82.31, while the key foreign currencies are all up today, with the Pound leading the charge, up 96 ticks to 153.51. The Aussie is up 53 ticks to 92.10, and could be preparing for a rally above 92.60, but the FX traders will be watching tomorrow night’s Aussie CPI release to help determine where the Aussie might head next. We focus more on the Yen. The SEP13 Yen/USD futures are up 71 ticks to 100.51. We believe the Yen could be preparing for a big short-covering rally to at least 1.03, perhaps higher. If a reverse head and shoulders technical pattern completes on the daily chart, the Yen/USD could rally all the way to 1.10. If the USD keeps attracting sellers and especially if incoming Japanese economic data provides upside surprises, we could indeed see a Yen/USD rally.