Data showed service industries expanded in April at the fastest pace in eight months. The S&P 500 (CME:SPM14) added 1 percent last week, taking its gain this year to 1.8 percent. Today the Institute for Supply Management’s non-manufacturing index rose to 55.2 in April from the prior month’s 53.1. China’s manufacturing contracted for a fourth month in April. European stocks fell as violence escalated in eastern Ukraine.
Equities: The E-mini S&P 500 (CME:ESM14) is up 1.5 points to 1876, after having an early morning dip to almost 1860. The market rallied after the morning economic report came out better than the market was expecting. Again, we continue to focus on the 1867 level as our major line in the sand. If the market can hold above 1867, we believe we could see 1900 soon. If the market stays below 1867, we would not be surprised to see a bigger rush for the exits potentially taking the market down to 1800.
Bonds: The U.S. bond futures are down 12 ticks to 135’26. The bonds popped above 136 this morning for brief time, but then came down. 135 is our first key support level. It will be interesting to see how the bonds react to incoming economic data. We have been noting that the bonds have been in an uptrend throughout 2014 thus far, and wonder if it can continue, even with the Fed potentially taking away all of the stimulus by the end of the year. What will the bonds do when the Fed at some point starts to actually raise interest rates. Can the bonds still head higher?
Currencies: The Swiss Franc is up 2 ticks to 113.95. Our volume indicators could reflect a lack of buying interest near the 114 area, and we would not be surprised to see the Franc head back down to 113, if not lower. We believe the Ukraine uncertainty is propping up what are commonly called safe haven assets such as bonds, gold and Swiss Franc. The Yen is up 11 ticks to 97.95. It has not had the major short covering rally we think is possible, but we still believe the Yen could easily head back up to 100 vs. the USD. The Euro is quiet today, up 6 ticks to 138.76.
Commodities: Gold (COMEX:GCM14) is up $8 to $1311, after not being able to stay below the key support level of $1280. We believe gold is still in a subdued state of volatility. But with that said, we could see gold heading higher to $1350 into the summer. Soybeans (NYBOT:JSN14) are down $.05 to $14.66, after almost hitting a key Fibonacci retracement level of $14.83. We would not be surprised to see this contract test the waters below $14.50.
WTI crude oil (NYMEX:CLM14) is down $.14 to $99.62. The recent trend that developed in the second half of April has been down, and our next key level of support could be at around $98.15. The wheat market strengthened today, with the contract heading as high as $7.40 before coming back down to $7.26. This could also potentially be due to supply fears related to Ukraine.