The S&P 500 rose 0.5% to 1,772.38 at 10:02 a.m. in New York, surpassing its previous record of 1,771.95 on Oct. 29. Tesla Motors Inc. tumbled 11% as vehicle sales missed some analysts’ estimates. The S&P 500 has surged 24% this year, heading for the best annual performance since 2003. The Conference Board’s index of U.S. leading indicators, a gauge of the outlook for the next three to six months, increased 0.7% in September. German manufacturing orders, adjusted for seasonal swings and inflation, jumped 3.3% from August, when they fell 0.3%, the Economy Ministry said today
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) rallied to the key resistance level at 1770, but then has sold off since then this morning, now trading up 6 points to 1762.75. We have stated that one of our major resistance levels is 1770, and this was great resistance today. We would not be surprised to see the market continue to drift lower until we get more clarity on the GDP and jobs readings tomorrow and Friday. We believe the strong German manufacturing number is contributing to this sell-off from 1770 this morning, as this number could make it much less likely to see a rate cut tomorrow at the ECB meeting. Markets seem to not like non-stimulating policy moves from central banks. The real question on investors’ minds is how good or bad the U.S. economic data will be, as this will be a determining factor of the Fed taper decision. We believe we could see a ramp up in economic data from the U.S. and that taper-talk could escalate with that.
Bonds: The DEC13 U.S. 30-year bond futures (CBOT:ZBZ13) are up 2 ticks from yesterday, but nothing significant in our eyes. The bond market is really quiet, waiting for the GDP and non-farm payrolls data. We are of the opinion that we are ripe for another down-move in bond prices over the next several months. We understand this move might be much more likely to occur, and is almost dependent, on above expectations economic data from the U.S. We will watch Friday’s jobs number closely, and look for a bond rally if the number is 100K or less, and a big sell-off if the number is 200K or more.
Currencies: The DEC13 Euro rallied 45 ticks to 135.21 on positive German manufacturing data, potentially making an ECB rate cut this week much less likely. The DEC13 New Zealand dollar is up 69 ticks to 83.60, bouncing very hard off the 82 level it hit on Nov. 1. We are watching the Euro/Swiss rate, and we believe this pair could be ready for a rally, potentially breaking the 1.24 level. The DEC13 USD is down 20 ticks to 80.58.
Commodities: The story we are focusing on is Coffee. DEC13 coffee futures (NYBOT:KCZ13) are now down 14 of the past 17 days, and we wonder when this market will be considered bargain territory! DEC13 coffee is trading down $.007 to $1.028, and it could even approach the $1 level. We believe if coffee breaks the $1 mark, we could see some bargain buying ideas take hold of the market. DEC13 WTI crude oil (NYMEX:CLZ13) has reversed some recent losses this morning, trading up $1.24 to $94.61. DEC13 gold (COMEX:GCZ13) is up $8 to $1,316, while DEC13 corn is down $.01 to $4.2375. We have our next downside target for corn at $4.16. If corn breaks $4.16, we would not be surprised to see a short-covering rally.