Consumer confidence fell this morning and an index of manufacturing in the Richmond region shrank. The S&P 500 declined 1.4% in the previous three trading sessions after reaching an all-time high of 1,725.52. Another report showed home prices in 20 U.S. cities rose in the 12 months through July by the most in more than seven years.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) started off the morning on a selling note, but has quickly rallied back into positive territory as this current focus on a potential extension of the no-taper policy might cause the market to stay close to 1700. However, we do believe that this area of close to 1700 may be a short-term ceiling, and we still look for the market to close its recent gap at around 1684. The next target below there is 1675, and we would not be surprised to see the market hit that level as well.
Bonds: The bonds stay strong today, with the DEC13 U.S. 30-year futures (CBOT:ZBZ13) up 24 ticks to 132’21. We have our first upside target at 133’16. We believe the bonds are in rally mode. With consumer confidence underwhelming the market today, we believe this is further impetus for the bonds to continue to head higher. We believe it will take a lot to get the bond market to make new lows below 128, although over the medium to long term, it is very possible if the U.S. jobs data causes the Fed to be more aggressive with their tapering ideas.
Currencies: The DEC13 U.S. Dollar Index (NYBOT:DXZ13) is quiet, but up again today, this morning trading up 5.5 ticks to 80.625. The DEC13 New Zealand Dollar is down 109 ticks (1.31%) to 82.23. We have 82 as a key support level. The DEC13 Swiss Franc is quiet also, but holding right below the 1.10 level. We would not be surprised to see a burst higher to 110.34, which is our next market profile target. The DEC13 Euro is down 3 ticks to 134.95, and we still believe this currency could head to 1.37.
Commodities: DEC13 gold (COMEX:GCZ13) is down $9 to $1,317, after seeing some sharp value buying below the $1,310 level. Our key support level is $1,300, and our next level below there is $1,265. Gold might find some solid short term support at $1,300, but we do believe it can head much lower if and when the Fed sees reason to start the tapering process. We also focus on Corn today, as the DEC13 contract (CBOT:CZ13) is just below $4.50 this morning. We believe corn futures are in a downward pointing trend channel, and would not be surprised to see Corn head below $4.40 to potential $4.25.