Revenue from Amazon.com Inc. and Microsoft (MSFT) Corp. topped estimates, while data today showed consumer confidence in the U.S. dropped in October to a 10-month low. Orders for U.S. durable goods rose in September by the most in three months.
Equities: The market is quiet today; likely slow in anticipation of next week’s Fed meeting. The DEC13 E-mini S&P 500 futures (CME:ESZ13) are up .5 points to 1749, right above our key pivot level of 1748. We have a short term upside target at 1760 according to the market profile from yesterday’s trading. We believe it is likely that the Fed will indicate that they are not ready to taper the QE program next week, and thus may propel the markets higher in the short term, possibly at least to this 1760 level. If for some reason the market cannot hold above 1748, we look for a move lower to at least 1733, possibly 1716.
Bonds: The DEC13 U.S. 30-year bond futures (CBOT:ZBZ13) are up 10 ticks to 135’11. Again, we do believe this market will especially be quiet until we get official word from the Fed on Wednesday on their ideas on the future of the QE policy. If we do get a dovish Fed, we look for the bond market to rally to at least 136. We believe the key focus will be on low inflation readings, and the Fed will indicate that they will seriously consider tapering only when the inflation numbers give them a reason to.
Currencies: The DEC13 Euro is hovering near the 138 level, while the DEC13 Pound is down 39 ticks to 161.59. Both the Dec13 Aussie and DEC13 Kiwi are down as well today. The Kiwi is down 52 ticks to 82.65, approaching a key support level at 82, while the Aussie is down 27 ticks to 95.53. The next major support level comes in at 94.75. We believe the Aussie and Kiwi are weak mainly due to this week’s news that China money market rates have increased. If the economic data from China continues to impress, these currencies might find themselves in rally mode again.
Commodities: Crude oil has reversed some of yesterday’s losses, with the DEC13 contract (NYMEX:CLZ13) trading higher by $.33 to $97.44. This could just be a short term retracement in the middle of a larger down move, which could extend to the $92-$94 region. Gold and silver are also down slightly today, with DEC13 gold trading (COMEX:GCZ13) down $5 to $1345. We do believe gold might rally further next week if the Fed is as dovish as many analysts think. DEC13 lean hog futures are up again today, this time up to 90.1 cents/lb.