1652 Key Level For SP 500, Gold Long Term Target…

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Equities: JUN13 emini SP 500 futures are down 2.5 points on this last day of the month, capping off a strong performance in May. 1650 is a key psychological level, and the market seems to be gravitating towards this level today. Our key level for this market is 1652. This can be looked at as a line in the sand. If the market can stay above this level, we look for a test of the Bernanke blow-off top high of 1685, as the overall tone of investors seems to be continually bullish equities. If the market takes a turn lower and stays below 1652, we look for an approach of a key support level of 1621.

Bonds: The bond market is weak again today, with the JUN13 30yr bond futures trading down 26 ticks. This market has been in a strong downtrend through the month of May, and we believe that the bonds could head much lower, especially if the Fed is more explicit about tapering the stimulus program. We are also closely watching the MAR 2016 eurodollar interest rate futures to detect what the market is thinking about interest rate movements over the shorter term.

Currencies: The Japanese Yen has experienced some short covering movement over the past couple of days, staying above a key support level of 97.52. The Yen got up to 99.78 this morning, but is now trading at 99.04. The Aussie dollar is down again today, trading down 76 ticks to 95.85. The key level for this market is 96.17. If the market stays below this level, we could see more selling to new lows and a potential downside target of 94.94. However, if the Aussie can stay above 96.17, we could see a rally to a key resistance level of 96.80.

Commodities: Gold is down $16 to $1395. We believe this market has bearish pressures working, and have a longer term target of $1200. We believe the gold market will continue to suffer as investors potentially increase equity allocations in addition to the Fed possibly curtailing the QE  program this year.  We see the $1500 as a key ceiling for gold. Crude oil, even with very bearish supply data, has held up these past couple of days. It is down $.43 this morning to $93.17. We still believe in the bear story for crude, especially if the US dollar continues to rally.

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.