The Standard & Poor’s 500 Index (CME:SPM14) fell the most in a month yesterday. The Russell 2000 has dropped 1.3 percent this week, and is now 9.2 percent below its record from March. Reports this week showed an unexpected decline in U.S. industrial production and slowing retail sales. Consumer confidence fell this month after reaching a nine-month high in April.
Equities: The E-mini S&P 500 (CME:ESM14) is up 1.25 points to 1868.50 on very subdued Fridaymorning trading. The market still looks like buyers are looking for value opportunities to get long, however, we are still closely watching our key level of 1867. If the market can’t sustain rallies above 1867, we believe we will head back lower, possibly even down to 1800. However, if the market can find strength above 1867, we would not be surprised to see a puncture of 1900. Even if the market corrects another 2-3%, we would still be fairly high relative to where we were a few years ago. Thus a short term correction may just be a normal course of events.
Currencies: The U.S. Dollar is above 80 again, today higher by 2 ticks to 80.08. The Euro (CME:E6M14) is down 10 ticks to 137.04, and even though an initial market profile price target to the downside was recently hit, we still believe the Euro has potential to head lower into next month’s ECB meeting. We believe the Euro could break below 1.36 very soon. The Yen/USD is up 2 ticks to 98.53. The Yen has been in a range all of this year, and we tend to think the Yen may have a short-covering rally soon. Next week might be a huge week for the Yen as the BOJ meets. The JUN14 Pound almost hit 1.70, but didn’t quite make it. It has sold off since then, and is up 31 ticks today to 168.22
Bonds: The bonds hit a key target level of 138 we have been focused on. The uptrend still looks like it is intact for the bonds. However, the 138 level could be decent resistance, and we would not be surprised to see the bonds come back down a bit, more towards 136’16.
Commodities: Energies are strong today, with WTI (NYMEX:CLM14) Crude oil up $.61 to $102.11, not being able to find more sellers below the $99 level it hit recently. Heating Oil is up $.146 to $2.9652. Heating oil has also been in a trading range this year, and we tend to think this range might continue for the short term. The grain markets are down today, with corn (CBOT:CN14) down $.01, Wheat down $.0475, and soybeans down $.05 to $14.6975. Wheat has really slid in recent days from the swing high of around $7.40. Gold (COMEX:GCM14) is very quiet, and like several other commodities, has been in a trading range this year.