- Confidence among U.S. homebuilders plunged in February by the most on record as bad weather is the likely culprit. The National Association of Home Builders/Wells Fargo sentiment gauge slumped to 46 this month from 56 in January.
- Coca-Cola fell 3.9% to $37.41 for the steepest drop in the Dow.
- A measure of German investor confidence fell more than forecast and the Federal Reserve Bank of New York’s general economic index missed estimates.
Equities: The March E-mini S&P 500(CME: ESH14) is up 3 points to 1838, almost breaking above all-time highs. The market has been on an amazing rally ever since trading below 1740 less than two weeks ago. Our next upside targets according to the market profile are 1855 and 1867.
Overall, the market does seem to have major underlying strength to it, and we would not be shocked to see this market move higher, perhaps to at least 1855. The market seems to believe interest rates will stay low for a while, even with the tapering process intact. We really are excited to see upcoming economic data reports such as the CPI and jobs numbers. We believe that the cold weather this winter may have put a very short-term damper on economic activity, but things could potentially really pick up into spring and summer.
Bonds: March 30-year bonds (CBOT:USH14) are up 10 ticks to 133’08. It’s interesting because the S&P 500 is up as well. Again, we believe the market’s idea that Yellen will keep underlying rates low for a while could be driving both stock and bond prices higher. A low interest rate environment could continue to propel both stock and bond prices higher. However, the biggest catalyst to a sell-off in bonds might just be any one of the upcoming jobs reports. If we start to see a hiring bonanza as weather gets warmer, the Fed may not opt to pause the taper, and we could see bonds start to head lower again.
Currencies: The EUR/GBP spread has bounced off a very key support level of 81600, and is now up to 82375, because the euro is actually up on the day while the pound(CME:BPH14) is down 43 ticks. We believe the Euro(CME:ECH14) could continue to head higher in the short-term, possibly approaching the 138.50 level. The March Japanese yen future(CME:JYH14) is down 46 ticks to 97.71, which could be a key support level at this point. The Aussie dollar is up 7 ticks to 90.25. The Aussie is fairly quiet today, and it looks to be trading right around its high volume level over the past few sessions.
Commodities: March natural gas(NYMEX:NGH14) is up almost 5% today to $5.47. We believe this market could potentially head higher before Thursday’s supply report, however, we believe the contract high of around $5.73 may serve as a ceiling. April RBOB gas(NYMEX:RBH14) has staged a powerful rally recently, trading from last Monday’s low area of $2.89 all the way to above $3.00 this morning. May copper(NYMEX:HGK14) is also up 2¢ to $3.28. Copper could continue to head higher, potentially to $3.35. May sugar is rallying today, up over 2% to $.1644. We would not be surprised to see more rallying to our next target of $.1680. April gold hit a key moving average resistance area of just above $1,330, and is now down to $1,323. We could see gold perhaps approaching the $1350 level. $1303 looks like great support for gold at this point. March silver is up 13 days in a row today to $21.84. Our next market profile target is $22.30.