Lawmakers continued talks to raise the government’s debt limit to avoid a default. The S&P 500 yesterday jumped 2.2%, the most since Jan. 2. Micron Technology Inc., the largest U.S. maker of memory chips, fell 3.9% to $17.71. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment for October fell to 75.6 from a final reading of 77.5 last month.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) is now up 5.25 points from yesterday’s close, and we all know that yesterday was a huge day up for the equity markets. Looking at this market using the “market profile,” we actually have an upside target of 1725, and we would not be surprised to see this market hit this target if we get news that the government is re-opening and the debt ceiling is raised. This news would potentially be a huge boost to equity markets. The market is above our key line in the sand of 1679, and our short term pivot level is 1686. We would not be surprised to see markets make new yearly highs before Christmas if we resolve the political situation.
Bonds: The DEC13 U.S. 30-year bond futures (CBOT:ZBZ13) are up 18 ticks to 133’07. After a 1 point drop yesterday, the bonds have rebounded, going higher alongside equities, potentially due to the Yellen effect. Bill Gross has come out publicly stating that he believes the Yellen effect will be bearish for long-dated Treasuries, but we have not really seen evidence of this yet, but of course it’s still very early. With that said, this market is still below our key level of 133’16. The bonds, overall, seem to be in a range, and without much economic data being released might stay like that until things change and the government re-opens.
Currencies: The DEC13 New Zealand Dollar is the biggest mover on a quiet day today, trading up 36 ticks (.44%) to 82.94. This market seems to be in a strong uptrend, and could head higher. The DEC13 British Pound is down 35 ticks today to 159.36, and we believe the Pound will be oversold if it hits our key 158.36 level. The DEC13 Euro currency futures are up 19 ticks to 135.57, We still believe this currency could head higher to at least 1.37.
Commodities: The gold market is getting crushed today, with the DEC13 gold futures (COMEX:GCZ13) down $31 to $1,266. Gold has crashed through key support levels of $1,300 and now $1,265. We believe gold is technically in a very bearish position and could head below $1,200. It seems like many key commodities are down today, such as the energy complex. NOV13 WTI crude oil is down $1.28 to $101.76. DEC13 corn futures are down $.04 to $4.34. We continue to believe corn is headed lower. DEC cocoa futures continue to stay strong, trading higher again today, this time up $7 to $2,736.