U.S. stocks rose, sending the Standard & Poor’s 500 Index to an all-time high. The Dow Jones Industrial Average gained 73.91 points, or 0.4 percent, to 17,053.04, climbing above 17,000 for the first time since July 29. The S&P 500 has rebounded more than 4 percent from a three-month low on Aug. 7. Purchases of previously owned U.S. homes unexpectedly rose in July to a 10-month high. Fed Chair Janet Yellen will speak tomorrow at the Fed Bank of Kansas City’s economic symposium that starts today in Jackson Hole, Wyoming.
Equities: The E-mini S&P 500(CME:ESU4) continues its amazing rally from its sub-1900 low put in just weeks ago. Today it is up 5 points to 1988.25, inching closer towards the key 2000 level. We would not be surprised if this level was even hit tomorrow, especially if both Yellen and ECB chief Mario Draghi assure markets that stimulus will be here to support equities. We are also very interested in the movement of the September mini-Russell futures(NYBOT:RJ). This contract is in the red today, and is well below 2014 highs. Could the Russell be a great opportunity to play stock market strength, considering it is relatively low vs. the other US equity indices? If the Russell can stay above 1145, we believe 1170 is the next key target.
Bonds: September Bonds(CBOT:USU4) are up 6 ticks after a three-day sell off from the 141 level. Both bonds and stocks could potentially rally tomorrow if we get dovish sentiment from the central bank chiefs Yellen and Draghi tomorrow. However, if Yellen emphasizes rising interest rates in 2015, we could see the bonds take a big dive as the market begins to re-price the beginning of the interest rate rising period.
Currencies: The September dollar index(NYBOT:DXU4) has been on a torrid bullish pace as of late, and today is taking a small breather. We believe that the bull-trend in the USD may last a while, and would not be surprised to see the USD continue to rally over the next several months. The SEP14 Pound is down 9 ticks to 165.86, just touching a key area of chart support near the 165.50 level. Our next key level of support comes in at around 164.60. We believe this would be a very interesting support zone if it got down there.
Commodities: December gold(COMEX:GCZ4) is down $17 to $1278, breaking a key chart support level just below $1280. Below $1280, gold could fall further, possibly approaching $1250. This bearishness in gold is likely due to traders selling gold in response to the hawkish minutes yesterday from the Fed. OCT14 WTI oil is up $.62 to $94.07, seeing strong buying below the $93 level. Just below $95 is our next resistance which is a key moving average line. Grains are rallying, with SEP14 wheat up $.07 to $5.47, and SEP14 corn up $.03 to $3.62. We would not be surprised to see more short term rallying in these markets as they have been “beaten down” a lot recently.