The S&P 500 (CME:SPU14) rallied 1 percent on July 18, rebounding from its biggest loss since April 10, but today is down 0.5%. A total of 10 S&P 500 companies are reporting earnings today. The index has not had a drop of more than 10 percent since 2011. The U.S. and Europe threatened tougher sanctions on Russia over its suspected role in the shooting down of flight MH17 in Ukrainian airspace.
Equities: The E-mini S&P 500 (CME:ESM14) is down 10.5 points to 1961. This is especially interesting after Friday’s surprising short-covering rally on the day of July options expiration. We believe that the S&P 500 could be losing upside momentum, especially with the increasing violence in Gaza and Ukraine. We would not at all be surprised to see this market head lower to at least test the lows of last week. 1975 is our key resistance level. It looks as though the market is having a tough time staying above 1975. As long as the market is below 1975, we believe it has a downward, corrective bias to at least 1945, and possibly 1920.
Bonds: The U.S. bonds are rallying today, as the equity markets retreat. The bonds are up 22 ticks to 138’24, pushing against a key resistance level right above here. We would not be surprised to see the bonds keep marching higher, as we could start to see more of a safe-haven bid. 140 is our next target, and according to the market profile, 139’16 is the next technical bond target. We believe the bond market will hit 139’16 this week.
Currencies: The U.S. Dollar Index continues its recent strength today, up 4 ticks to 80.64. The Euro is down 4 ticks to 135.24, which is the key support area from June. If the Euro can break through and hold below this level, we believe it could actually head lower to our next key target of 133.76. The other currencies seem to be starting the week on a quiet note. The Swiss Franc is down 2 ticks to 111.39, right above a key 200 period moving average. The Pound could not hold above 171.50, and today is down 34 ticks to 170.52. The bottom of our price bands comes in at just above 169.50. We could potentially see the Pound headed to that level, but we still believe the Pound could make new highs this year.
Commodities: Natural gas (NYMEX:NGQ14) gapped lower today, and is now down almost $.09 to $3.86. Our next key level from the market profile is $3.83. We think that it will be at oversold levels if it heads below $3.83. RBOB gasoline (NYMEX:RBQ14) is up around $.02 to $2.8815 today, after having been sold off pretty hard these past few weeks. The $2.85 was a great technical support level, and it held. Gold (COMEX:GCQ14) is up slightly to $1,311, not being able to hold below $1,300 on last week’s dip. Grain markets continue their slide, with corn down $.07 to $3.64, below our profile level of $3.67. If corn gets below $3.50, we think buyers will look at that as oversold.