Facebook Inc. (NASDAQ:FB) climbed 2% after the operator of the world’s most popular social network said it will sell advertising on its Instagram photo service. Optimism looks to have grown that lawmakers would reach a deal to end the budget impasse. Pacific Investment Management Co.’s Bill Gross and BlackRock Inc.’s Larry Fink said the showdown will be resolved without a debt default.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) is back up today after hitting our key level of 1664 yesterday. Today it is trading up 9 points to 1678.75, which is right below our key level of 1679. Our next level higher looks to be 1692. We believe the short-term direction of the markets is highly influenced by how long the market thinks the shutdown will last. 1679 is our key pivot level. It looks like the market, as we have been noting, is out of “trend-mode” and just wavering in a range at this point, with some recent bearishness due to the shutdown and debt ceiling issue. We believe the debt ceiling will be raised this month.
Bonds: The DEC13 U.S. 30-year bond futures (CBOT:ZBZ13) are down 9 ticks to 133’05, below our key level of 133’16. This is a very important level to us, and now looks like good resistance. We believe this market will be somewhat subdued until we get further indication on how this US political situation of a government shutdown will be resolved. The bond market could still rally further if this uncertainty continues, but we will really need to start seeing real economic data to see what the Fed might or might not due with their tapering decision. Until we got real economic data, which we missed today (key monthly jobs report was not issued) due to the shutdown, the bonds might be quiet.
Commodities: DEC13 gold futures (COMEX:GCZ13) are down $7 to $1,310, as the safe haven assets which have been rallying recently have declined this morning as equity markets rallied. We continue to believe gold is in a neutral to bearish trend, and might consider staying below $1,300. NOV13 Heating oil and NOV13 RBOB gas futures are down today, after a brief rally yesterday. We believe the trend of these markets is down. DEC13 corn futures (CBOT:CZ13) are up $.03 to $4.42, after a sharp sell-off below the $4.50 level. $4.35 looks to be support at this point. NOV13 crude oil is somewhat quiet, trading up $.58 to $103.89. We have the $105 area as key resistance.
Currencies: The DEC Euro has reversed some gains it has made today, trading down 25 ticks to 135.99. We still believe this currency is strong, and might head to 1.37. The DEC13 British Pound is down 89 ticks, or .53% as the market has seen the 162.50 level serve as major resistance before the upcoming BOE policy announcement. The DEC13 Swiss Franc ALMOST hit our key resistance level at 111.60, and is now down 47 ticks on the day to 110.75. We believe the rally might be stalling here, and really everyone is just simply “waiting” to see how this budget deal and debt ceiling discussion resolves.