U.S. stocks rose, pushing the Standard & Poor’s 500 Index to a record. Investors have dismissed worse-than-forecast U.S. economic data over the past two weeks, speculating that severe winter weather explains the weakness in reports such as housing and hiring. Ukraine replaced its central bank chief as it scrambles to fend off default, while Russia condemned the interim leadership.
Equities: The March E-mini S&P 500(CME:ESH14) is up over 20 points to 1855. We have our next two targets at 1860 and then 1873. At this point, it would not be shocking to see both of these targets get hit, as we are seeing powerful bullish momentum in the equity markets. We believe that this is almost a relief rally in the sense that the market may be looking more positively towards a power shift in the Ukraine; 1900 doesn’t seem too far away.
Bonds: The March bonds are down 6 ticks to 132’29(CBOT:USH14). We believe that the bonds could be headed lower, possibly approaching the 130 level. If the S&P 500 continues to trade higher, we could see another rotation out of bonds, the “risk-on” trade. Technically, the bonds look bearish to us when analyzing key indicators on the daily chart such as the MACD; 133’08 is our key resistance level, and 132 is our next downside target.
Currencies: The Aussie dollar(CME:ADH14) is up 67 ticks to 90.27. The Aussie dollar is in a bullish technical environment, and our next target is 91.06. The euro(CME:ECH14) is down 5 ticks to 137.39. It seems to be in a quiet range trade this morning. The March U.S. dollar index is down 4 ticks to 80.22. The 137.60 area for the Euro may be a very significant barrier to breach. If the euro has trouble getting above that level, we could see a reversal and see the euro head to the bottom of its recent range to 1.35. The Swiss Franc is similar in that today is quiet, and is nearing a key resistance barrier at 112.80.
Commodities: April gold(COMEX:GCJ14) is strong again today, trading up $14 to $1,337. We believe the path of least resistance is higher for gold. April crude oil is up 96¢ to $103.16. Our next key resistance level is $103.50. March natural gas(NYMEX:NGH14) suffered a big reversal today after a tremendous run-up last week. Nat gas is down to $5.74, after opening higher last night and almost hitting $6.50! It seems as though forecasts for warmer weather as well as technically over-extended conditions may be responsible for today’s sell-off.