S&P 500 fails rally attempt

The Standard & Poor’s 500 Index (CME:ESM14) lost the most in five weeks yesterday.

Weaker-than-forecast economic data from China and escalating tension in Ukraine overshadowed reports showing an improving U.S. economy. Russian President Vladimir Putin is preparing to “invade eastern Ukraine” after occupying the country’s Black Sea peninsula of Crimea, Estonian Defense Minister Urmas Reinsalu said in an e-mailed statement (according to Bloomberg). Producer prices dropped in February, held back by the biggest decrease in the cost of services in almost a year; the 0.1% decrease in the producer-price index followed a 0.2% rise the prior month.

Equities: The E-mini S&P 500 (CME:ESM14) is down 2.25 points to 1837.50, after trying to rally earlier in the morning but not achieving success. We have our next key longer term Fibonacci retracement level at 1828. We would not be surprised to see this level get hit very soon. The Sunday Ukraine referendum looks to be causing some bearishness in the market. Furthermore, recent weakness in China data seems to also be exacerbating the recent waves of bearishness.

Bonds: The 30-year Treasury Bonds are rallying more today, likely on safe haven flows before Sunday’s key referendum vote in Ukraine. The 134 level seems to be a big barrier. At the same time, the stock market seems  pretty weak, and could decline further, which could potentially translate into more gains for the bond market. It seems as though traditional ‘safe haven’ assets are attracting investors today, such as bonds, gold (COMEX:GCJ14), Yen, and Swiss Franc. It will be interesting to see how the bonds trade ahead of next week’s FOMC meeting. We think the meeting could actually put some type of headwinds for bond rallies, as we expect another taper to occur.

Currencies: We are seeing traditional safe haven currencies rally today, such as Franc and Yen. The Yen is approaching a key level of 99. The Yen could rally above 100. The Franc is pushing up against a key resistance level of 115 even, but we actually have a key market profile target level of 115.50. The Yen and Franc will open much higher on Monday if the referendum vote passes, and Russia tries to take Crimea from Ukraine.

Commodities: Gold (COMEX:GCJ14) is up $10 to $1,382, surpassing our key target level of $1,377. The volume looks bullish for gold, and we don’t detect any key reversal signals just yet. Also, silver (COMEX:SIJ14) could be poised for a move higher. We are also closely watching the recent high flier, the lean hogs contract. This contract was limit up yesterday, but couldn’t sustain the rally today. This market is down this morning to $1.185. We believe lean hogs could head lower from here. $1.19 was our key market profile target which was hit, and now that could serve as key resistance. Wheat seems to be the strongest of the grain markets, up $.12 to $6.86, likely on the Ukraine tensions, as wheat as key product affected by that region.

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