The U.S. economy expanded at a 3.2% pace in the fourth quarter as Americans’ spending climbed the most in three years. Facebook rose as much as 16% to $62.30 in New York. United Parcel Service Inc. (UPS) said fourth-quarter profit dropped 8.5%.
Equities: The MAR14 E-mini S&P 500 (CME:ESH14) is up 10.75 points to 1782, after recent corporate earnings reports, as well as an excellent reading on GDP, sparked investors to buy equities. 1775 is our key support level. Even with the second taper yesterday, the stocks are showing resilience, and climbing this morning. 1800 and 1810 are our next key resistance levels. We believe the more the market sees underlying strength in the economy (a la GDP, jobs growth etc.), the greater the likelihood for the market to continue its bull trend, and ultimately approach the high area of 1840 later this year.
Bonds: The MAR14 U.S. 30-year bonds (CBOT:ZBH14) are down 12 ticks to 133’04, after almost breaking through the 134 level yesterday. 133’12 is our key resistance level for the bonds. Overall, if we keep seeing strong data out of the U.S., we could see the bonds start to head lower again. There might still be that “safe haven bid” in the bond market because of the recent emerging market currency woes.
Currencies: The MAR14 U.S. Dollar Index (NYBOT:DXH14) shot up this morning on a higher than expected GDP report. The USD is up 46 ticks to 81.04. We are still believers in the bullish USD idea, thus we still focus on our upside target of 82.60 for the USD. The MAR14 Canadian dollar (CME:D6H14) is still fairly weak today, down 13 ticks to 89.37. This looks to be in a downtrend, and could head lower from here. The MAR14 Aussie (CME:A6H14) is rebounding today, up 38 ticks to 87.55. 88.50 is our next upside target. The MAR14 Euro (CME:E6H14) is down 77 ticks to 135.85, and on a longer time perspective, we would not be surprised to see the Euro head to 1.30, possibly this year.
Commodities: FEB14 gold (COMEX:GCG14) is down $20 to $1,240, likely a tapering hangover. We would not be surprised to see gold approach the $1,200 level, especially if we continue to see strong economic data. Natural gas (NYMEX:NGH14) continues its extremely volatile trading today, with the new front month MAR14 contract down $.30 to $5.17. MAR14 WTI crude oil (NYMEX:CLH14) is up $1.19 to $98.55, breaking through a key barrier at $97.50. This leads us to believe that crude oil is building strength, and may approach $100 soon.