Claims for jobless benefits unexpectedly dropped last week to the lowest level in almost six years, while a separate report today showed the consumer-price index increased 0.2% in July after a 0.5% gain the prior month. Cisco is down 6.7% to $24.62. Egypt’s stock exchange and banks were closed today, for the first time other than on public holidays since the January 2011 uprising.
Equities: The SEP13 E-mini S&P 500 (CME:ESU13) has taken a significant (relative to recent movement) drop today on a much better than expected jobless claims number. We believe there are additional factors that are causing this drop, such as the CPI number coming out in line with expectations and perhaps overall investor concern about the Egypt political and social crisis. Technically, our market profile analysis indicates a next target on the downside at 1641, and the next chart-based target is 1649, with 1679 potentially serving as key resistance. We believe the market will continue to trade with a bearish to neutral tone up until next month’s FOMC meeting.
Bonds: The SEP13 U.S. 30-year bond futures (CBOT:ZBU13) are down again today, this time down 1 point to 131’20. This is very likely due to the excellent jobless claims number this morning, which is likely causing traders to sell bonds in anticipation of a higher likelihood of a tapering announcement next month. However, this market is in an interesting spot now. Does it head lower due to a potential tapering in September, or does it head higher from here as a “flight-to-quality” bid may emerge should the Egypt situation exacerbate? We are closely watching the key line in the sand at 131’16, which the market is above now. If the bonds can stay above this level, we look for a retracement rally to 132’09. This could potentially occur even more-so if the stocks keep dropping. However, if the 30-year continues the sell-off, we have a market profile target below at 130’08.
Currencies: The SEP13 U.S. Dollar Index (NYBOT:DXU13) spiked higher on the data this morning, but has given back some gains, and is actually down 8 ticks today to 81.68. We still believe the USD might be in the beginning stages of a move higher to at least 82.50, as the US economic data has indeed picked up. The SEP13 Aussie dollar is down 35 ticks to 90.88, but the key 90.50 support level held up this morning on a spike lower. The SEP13 Euro futures are up 3 ticks to 132.64, but to us still look to be in a potential downtrend, and may head below 132 soon. It seems like the currency market may start to trade with a more quiet tone as we get closer to the September FOMC meeting.
Commodities: Gold and natural gas continue to hold bullish tones today, with SEP13 Natural Gas (NYMEX:NGU13) up $.075 to $3.41. This $3.41 is a key resistance level for this market. We have a key pivot price of $3.39, and a next target higher of $3.48 according to the market profile. DEC13 gold (COMEX:GCZ13) is having a big day up today, trading up $26 to $1,360. We believe this is likely due to the crisis in Egypt as investors look for a safe haven. However, we believe that while gold could very well head higher, the ceiling could be potentially found in the $1,380-$1,420 zone as global central banks focus less on expanding their stimulus packages on more on when to curtail them. DEC13 corn and NOV13 soybeans are continuing their post-USDA report rally today, as the report was more bullish for these markets than traders were anticipating.