Yen Falls 3000 Ticks Since September

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Output at factories, mines and utilities fell a more-than-forecast 0.5 percent after a revised 0.3 percent gain in the prior month that was weaker than previously reported, data from the Fed showed today. In addition, data from the Labor Department showed wholesale prices in the U.S. dropped in April by the most in three years.

Equities: The incredible bull run of the SP 500 continues today, with the JUN13 emini SP 500 futures trading down overnight, but now up 3.25 pts to 1651.25. The first resistance level of the day is at 1656. This market has surprised many by rallying this far, as more and more investors have piled into the equity markets while getting out of gold and bonds. Our technical target for 2013 continues to be at 1690.

Bonds: The US bonds have felt and traded very weak recently, likely due to ultimately the market’s questioning if the Fed will diminish QE policies sooner rather than later. The US 30yr bond futures are down again today, this time down 6 ticks. We still believe this market could be headed at least to 141, from 143’27 (where it is now). The next big data release for the bond market is CPI (inflation data) tomorrow morning, and the closely watched non-farm payrolls # the first Friday of April. The market has a laser focus (thanks to the Fed’s emphasis) on the unemployment %.

Commodities: Gold has taken another big spill this morning, this time down over 2%, or $31. Gold fell below $1400 to $1393, and we believe this market is very susceptible to more selling. We would not be surprised if gold tested $1300 again this year. Crude oil continues to fall, today trading down $1.75 to a low thus far at $92.13. Again, we believe this market has much more room to fall.

Currencies: The major story continues to be the US dollar strength. Today, instead of the Aussie and the Yen getting hammered down, it is the Euro and the Pound. We see a potential for the Euro to fall much farther, as the potential for the long Euro/short Yen trade gets unwound. Now the Euro is down 82 ticks to 128.57. As long as it stays below 1.30, this market could be prone to more selling. The Aussie has taken a hit fairly quickly, and does have potential to fall farther, although it is slowing down today. The Yen ha sold off over 3000 ticks since last fall, and we are projecting potential for a short term bottom at these levels. We like 97.60 as a key decision level. If then Yen can stay above 97.60, we look for a short – covering 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.