The Institute for Supply Management’s non-manufacturing index increased to 56 in July from 52.2 the prior month. The S&P 500 is trading at 15.5 times estimated earnings, compared with an average of 13.9 over the last five years, data compiled by Bloomberg showed.
Equities: The equity indexes have started off the week on a somewhat quiet note, with both the SEP13 E-mini S&P 500 and Nasdaq trading near unchanged levels. The E-mini S&P 500 (CME:ESU13) is actually down .75 points while the E-mini NQ is up 1.5 points on the morning thus far. 1702 is our key pivot level for the SEP13 E-mini S&P, and we have an upside target of 1719according to the market profile. We think if the market does get up to the 1720 area, it could be considered to be at overbought levels, at least for a temporary time. We will watch to see how the market holds up above the 1702 pivot level though, as this is the high volume area of the recent market profile.
Bonds: The SEP13 30-year (CBOT:ZBU13) is down 20 ticks to 133’03, and we have a key support level at 132’06. We believe this 132’06 level could serve as excellent support for the near term for this market. If the equity markets do sell off from these record high levels, we could see a short-covering rally in the bonds, perhaps especially the short end of the curve, as we think investors still are not excited to buy 30-year bonds with an impending tapering of stimulus and further uncertainty on who the next Fed chairperson will be. 134 could act as a key magnet level for this market.
Currencies: The SEP13 U.S. Dollar Index futures (NYBOT:DXU13) are up 7 ticks today to 82.05, holding above the 82 level even after last Friday’s slightly below consensus jobs report. We believe the USD will hold strength going forward, as we think investors don’t want to sell to much USD in the face of potential strong US economic data. The SEP13 Euro is down 37 ticks to 132.51, and the SEP Japanese Yen is up 28 ticks on the day to 101.44. The yen has been extremely resilient over the past 2 weeks, and Thursday’s BOJ announcement, if they do not indicate further stimulus, may cause a significant rally in the yen, perhaps approaching the 103 level.
Commodities: DEC13 corn (CBOT:CZ13) futures have been beaten down over the past month, and are down again today, trading down $.04 to $4.59. We have our next technical target at $4.50. We are curious to see when the market will bounce from overbought conditions, but we may have a ways to go. DEC13 gold futures (COMEX:GCZ13) are down $9 to $1302, as the USD has not continued selling off from Friday’s report. We believe the $1300 could be a magnet level for the near term for gold, and would not be surprised to see it head lower, especially if forthcoming U.S. economic data is strong.