UPS dropped 1.7% as it projected earnings that trailed estimates. General Electric lost 2.9%, while Intel Corp. fell 4.3%. Industrial production rose for an fifth month in December, capping the strongest quarter since 2010. Housing starts fell 9.8% in December to a 999,000 annualized rate following November’s revised 1.11 million pace.
Equities: The MAR14 E-mini S&P 500 (CME:ESH14) is up 1.25 points to 1837.50, on a very quiet start to the day. This 1837-38 area is very important, as it seems to be a line in the sand for this market. We believe the market will head lower from here, especially due to the overall negative tone to today’s earnings. With key companies such as General Electric AND Intel Corp. falling today, we have the tendency to believe this could act as a drag on the overall market sentiment today. Furthermore, we have detected a potentially bearish candlestick formation on the weekly E-mini S&P 500 chart.
Bonds: The MAR14 U.S. 30-year bonds (CBOT:ZBH14) are down 3 ticks on a quiet Friday before the Monday holiday. We believe the bond trade may be somewhat subdued before this month’s FOMC meeting, where we could very well see another taper. Furthermore, the February jobs report is just around the corner, and this could also be a very high impact event for the bond market. If we see another sub 100K jobs number, we look for the bonds to have a powerful rally higher, as these yields may be very attractive to investors if we see two sub 100K jobs numbers in a row.
Currencies: There are two key currencies that are continuing the recent downtrends: The MAR14 Aussie (CME:A6H14) and the MAR14 Canadian (CME:D6H14). The Aussie is down 35 ticks to 87.47, while the Canadian is down 41 ticks to 91.04. Our next two key downside targets are 86.65 for the Aussie and 90.55 for the Canadian. The MAR14 USD is up 16 ticks to 81.18, and is staying above the key 81 level. If the MAR14 Euro keeps heading lower, staying below 1.36, we could see another leg higher in the USD, especially if we get another taper soon.
Commodities: FEB14 gold (COMEX:GCG14) is up $8 to $1,248. We believe gold could be in rally mode, and perhaps shoot for the $1,265 level. Heating oil continues its amazing rally, with FEB14 Heating (NYMEX:HOG14) oil up over $.03 to $3.0166. FEB14 WTI crude oil is up $.20 to $94.16, but technically could be at a resistance zone. MAR14 corn (CBOT:CH14) is down $.05 to $4.23; it seems like corn is having a lot of trouble sustaining recent rally attempts.