Wells Fargo & Co. fell 1 percent after reporting per-share earnings that did not rise for the first time in 18 quarters. Gap Inc. declined 1.2 percent after same-store sales in June unexpectedly fell. The S&P 500 (CME:SPU14) ended last week at an all-time high; the index has not had a drop of 10 percent in more than two years. The VIX has surged 18 percent this week.
Equities: The E-mini S&P 500 (CME:ESU14) is down 1 point to 1956.75, right in the middle of the recent value area of the market according to market profile. It looks like sellers are appearing when the market gets above 1965. We would not be surprised to see the market test yesterday’s low of the 1946 area again soon. Wells Fargo earnings may put a damper on rallies.
Bonds: The September U.S. Treasury (CBOT:USU14) bonds are up 11 ticks to 137.14. The bonds have rallied almost 3 points over the last week or so, a pretty significant rally for such a short amount of time. 138’30 is our next major level for the bonds. If the SP500 starts a downtrend from here to 1900 or so, we could see the bonds head much higher, especially with the events in Israel/Gaza.
Currencies: We believe the Euro is headed lower, it is down 4 ticks today to 136.03. We have a longer term target of 133.76, and a shorter term target of 135.55. The Canadian Dollar is down 59 ticks today to 93.14, after almost breaching the 94 level. The British Pound is down 36 ticks to 170.97. The economic data has been strong, and now with concerns resurfacing in Europe, we could see the Pound and especially the Euro start to head lower.
Commodities: With all this talk of asset bubbles recently, we really are starting to see some major commodities get some air taken out of the balloon so to speak. For example, the grain markets have been in a major slide recently, as well as heating oil, RBOB (NYMEX:RBN14) gas, and crude oil. August natural gas (NYMEX:NGN14) has gone from $4.90 to $4.13 today in just about one month, an almost 20% decline!
WTI crude (NYMEX:CLQ14) oil has also slid from about $108 to $101.69 today. The commodities that have been strong are the precious metals, with gold (COMEX:GCQ14) going from $1240 to $1336 today in just about one month, which is about an 8% increase. We believe gold and silver may consolidate in the short term, but have potential to head even higher.