Companies from Apple Inc. to Time Warner Inc. and Intel Corp. rallied amid deals and earnings reports. Time Warner surged 17 percent. Intel climbed 6.4 percent, the most in the Dow. U.S. industrial production climbed 0.2 percent in June, capping the strongest quarter in almost four years. Wholesale prices in the U.S. rose more than forecast in June.
Equities: The E-mini S&P 500 (CME:ESU14) rallied in the early AM, but came down from intraday highs more recently. It is now trading up 3 points to 1971, below our key resistance level of 1980. We believe the 1975/1980 is a very important area for the S&P 500. If we can stay below 1980, we believe that sellers will emerge and take this market down to our next major pivot area of 1945.
However, if the market really insists on making a run for 2000, we’d need to see sustained buying above 1975 in order to really believe 2000 is in striking distance. Yellen spooked the equity markets yesterday with her analysis of valuations of certain sectors of the market. It really looks like the market just is now taking it in stride, but the Russell futures are down 4.5 points to 1147, while the Nasdaq and S&P 500 (CME:SPU14) are both up on the day.
Bonds: The September U.S. bonds are up 5 ticks to 137’03. The bonds have been basically in an uptrend this year. The 139 is a level we are focused on as key resistance. Or key support level lies at 135. We believe the bonds may continue to march higher and 139 is our key pivot point for the bonds. If they can stay above 139, we could see a short capitulation trade bringing the market above 140.
Commodities: The commodities markets have had very interesting moves recently, with gold (COMEX:GCQ14) moving up almost $50 in a day, and then shortly thereafter heading down $30 in a day. Now Gold is up $5 to $1,302.
Natural gas (NYMEX:NGQ14) may have found a near term bottom at $4.08. $4.30 looks to be a major resistance level.
Grain markets got hammered in June and July, but they are looking like they are attracting some buying interest at these levels. SEP14 wheat is up slightly to $5.38. We believe it could head to $5.50 or even $5.65 as a stretch target. WTI crude oil (NYMEX:CLN14) broke down through $100 yesterday, but immediately bounced back and is no up $1.128 to $101.23. The $102.25 area looks to be key resistance.
Currencies: The recent story has been U.S. Dollar Index strength and Euro weakness. The Euro is down 37 ticks to 135.34. We believe this could be the beginning of a larger move down to 133.76, a key Fibonacci level. 1.36 is a key pivot level for the Euro, and the market is well below that area now. Moving in concert with the Euro is the Swiss Franc, down 31 ticks today to 111.37. The Pound is down 15 ticks today to 171.23, but is overall in a strong uptrend, and could push above 1.72 soon. 172.50 is a key resistance level for us.