A report showed home prices in 20 U.S. cities rose by the most since February 2006 in the 12 months through September. An S&P index of homebuilders surged 3% as all its 11 members gained. However, the Conference Board’s consumer confidence index fell to 70.4 this month from 72.4 in October. The S&P 500 has rallied 26% this year.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) is unchanged from yesterday’s close, trading at 1802.50. We anticipate volume to rapidly taper off into the Thanksgiving holiday on Thursday. We still believe the market could rotate downwards to around 1785. We do have two key data points between now and the end of the year – another jobs report as well as another Fed meeting. If we get a big jobs number, we could see the market try to price in a December or January taper, which could take the stocks a bit lower. We would not be surprised to see 1850 in the first quarter of 2014.
Bonds: The DEC13 U.S. bond futures (CBOT:ZBZ13) are up 16 ticks to 132’15. The bonds have been on a multi-day rally, and are still below a key resistance level of 132’25. Again, we reiterate that the jobs number and subsequent Fed meeting are very important to the bond market. The bonds look to be trading with cautious confidence that the Fed will wait until at least March to taper. That could change in an instant on the first Friday of December with the jobs report.
Currencies: The DEC13 Aussie dollar has been on a slide recently, ever since the IMF declared this currency to be overvalued by 10%. We believe the Aussie is close to being oversold on a short term basis. It is trading down 52 ticks to 90.92. Our next downside target is 90.56. The DEC13 Pound seems to be very strong, fighting back any sell-offs. Today, the Pound is up 31 ticks to 161.77. We would not be surprised to see the Pound try to break above its recent triple top just above 1.62. The DEC13 Canadian dollar has found selling below the key 96 cent level, trading down 2 ticks to 94.67 today. We believe this currency could head lower, especially if oil heads lower.
Commodities: The gold market saw a flurry of buying late in the day yesterday, with the DEC13 gold (COMEX:GCZ13) trading all the way up to $1,258. Today, however, the market is back down to $1,245. We believe it could approach $1,200. Agricultural markets are a bit weak today, with DEC13 corn (CBOT:CZ13) down $.04 to $4.27, DEC13 soybeans (CBOT:SZ13) down $.07 to $13.22, and MAR14 wheat down $.04 to $6.55. JAN14 WTI crude oil is highly watched to see if it can continue its recent downtrend. Today this market is up $.10 to $94.19. We would not be surprised to see a test of the $90 level.