Market Lower on Fear of Less Stimulus Today

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Bank of Japan Governor Haruhiko Kuroda said he sees no need to expand monetary stimulus immediately in an official BOJ statement made last night. Kuroda said the BOJ will consider longer funding operations if they become necessary.

Equities: The equity markets are selling off this morning mainly on the “disappointment” that BOJ chief Kuroda did not add any stimulus to Japan. The JUN13 emini SP 500 is down 14 points to 1628, below a key support level of 1630, but above the next key level at 1617.  The market seems to be in a range trade lately, trading between 1600 and 1650. We believe the market will have to see some blisteringly good economic data to convince it to go higher in the face of potentially decreasing stimulus from the US fed. We still believe that the 1595 level is a very important level for this market. Our next major long term support level is 1530.

Bonds: The SEP13 US 30yr bond futures we down all the way to 137.25, and are now down 7 ticks from yesterday to 138.22. The bonds have been extremely bearish since early May. We believe this trend will continue, as the market tries to price in a potential official Fed statement indicating a tempering of the QE program. We have a key potential short term magnet level at 138.30 on the market profile.

Currencies: After digesting Kuroda’s announcement that he will not add more stimulus to Japan at this point, the Yen rallied and is up 200 points today to 103.31. The Yen has, again, been very volatile recently. The Aussie is down triple digits again, this morning to 93.12. We have a key pivot level for the SEP13 contract at 93.67. We have key support at 92.85. There is an important Australian jobs release Wednesday evening which might effect the currency.

Commodities: AUG13 gold futures are down $13 to $1373. We believe gold is headed below $1350, and possibly below $1300. Crude oil (JUL13) is down $1.36 on fears that less global stimulus might have a negative effect on economic growth, and therefore crude oil demand. Oil is trading right near a support level at $94.50, and our level we are watching very closely is $93.78.

Past performance is not necessarily indicative of future results. Trading commodity futures and options is speculative, involves risk of loss, and is not suitable for all investors.