U.S. stocks rose for the fifth time in six days as corporate profits beat estimates. American Express Co. (NYSE:AXP) and Newmont Mining Corp. (NYSE:NEM) are among S&P 500 companies reporting earnings today. Investors will also get a reading on second-quarter economic growth tomorrow. Residential real-estate prices rose in the 12 months ended May at the slowest pace in more than a year.
Equities: The SEP14 emini 500 is up 4.5 points today 1977.50, which is right at our key pivot level of 1978. This 1978 level is a very important line in the sand for us. We believe that the bias might be to the upside this week. However, since the week is so busy with data (GDP, payrolls, FOMC), there is more potential for surprise moves in either direction. If GDP surprises to the downside, will the market rally because that might fuel the Fed’s continued dovishness? If payrolls comes out higher than expected Friday, will the market sell off because that might mean the Fed will be more ready to fully withdraw the stimulus in October? Ultimately, we have seen it be very difficult to ‘stay short’ this market, and would not be shocked to see the market make a run for new all time highs this week.
Bonds: The SEP14 US bonds made a rally above the 139 level, but came right back down. This contract is still up 13 ticks on the day to 138’21. The 139 level looks to be solid resistance for bonds. This week is a data-heavy week, and could indeed cause outsized movement in the bond market. Typically the bond market can move a lot on the monthly non-farm payrolls data, and we don’t expect anything different this time. If we for some reason get a weak payrolls number, we expect there to be a lot of buying in bonds. 137’11 is a key support area on the charts.
Currencies: The recent trend of USD strength continues today, with the SEP14 USD up 15 ticks to 81.27. The SEP14 Euro is down 19 ticks to 134.17, while the SEP14 Pound is down 38 ticks to 169.35. After touching the 94 level, the SEP14 CAD has come down recently, today down 26 ticks to 92.19. Again, we believe the Euro is headed to our major Fibonacci level of 133.76, its only 40 ticks away at this point.
Commodities: SEP14 WTI crude oil is down $.55 to $101.12 today. The downtrend of late June was pretty powerful, and after a brief rally this month to $104, the downtrend of late looks to be back in the forefront. Of course measuring the trends relies on relative timeframes. AUG14 gold is down $5 to $1298. We have noted gold to be in what can be called a ‘whipsaw’ trading environment, without a real detectable overall trend. $1280 looks to be the next key support. Cattle markets are on fire, with AUG14 Feeder cattle up to $221, and APR14 live cattle up to $1.58.