The S&P 500 has lost 4.6% from a record high on Aug. 2, and pending home sales dropped 1.3%, the most this year. Investors are closely watching the developments in the possible military intervention in Syria.
Equities: The SEP13 E-mini S&P 500 (CME:ESU13) is up 3.75 points to 1632, still beneath some very key levels of 1644 and 1649. We would not be surprised to see this market go lower, as downward momentum seems to be fairly strong at this point. We still watch 1623 as our next key downside target. The market may be trading slightly higher today on a weak housing number, which could be making investors think that we won’t hear an official tapering announcement in September. The Syria situation seems to be dominating everyone’s minds, and if there is a military strike in Syria, we might see more moves down in the equities, this is our opinion.
Bonds: The SEP13 U.S. 30-year bond (CBOT:ZBU13) had a very nice rally yesterday, but is now down almost one point to 132’20. This level is a key line in the sand, and the overall momentum for the bonds seems to be higher. We have our next key support level below here at 132. Conversely to equities, we believe the bonds will head higher if there is indeed a military intervention in Syria.
Currencies: The SEP13 U.S. Dollar Index (NYBOT:DXU13) is higher this morning by 33 ticks to 81.53. The USD is still stuck in the middle of a trading range of 81 and 82. The seemingly opposing forces for the USD are on the bull side, we have a “flight to quality” bid into the USD, but on the bear side, we have recent underwhelming economic data out of the US. The SEP13 Euro currency is down 52 ticks to 133.34, while the SEP13 Aussie spiked below 89 this morning, but is now trading at 89.33. We believe the Aussie could be in a zone where it heads higher from here and goes back up above the 90 level.
Commodities: OCT13 WTI crude oil (NYMEX:CLV13) was the story this morning, with this contract spiking to $112, and now trading higher by $1.33 to $110.34. The Syria tensions are likely causing investors to run up the price of oil. DEC13 gold (COMEX:GCZ13) also spiked a bit higher to $1,430, but is now down $2 on the day to $1,418. We are looking at $1,425 as an important pivot level for gold, and then the $1,480 level up above. The rally in soybeans has cooled off a bit, with the NOV13 contract trading down from its spike high to $14.09 to $133.77 this morning.