Euro Currency Looks Vulnerable

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After a big finish to last week with an upside surprise in the US monthly jobs report, it looks as though key markets are continuing their momentum from last week, such as the SP 500 and the US bond futures. It is a quiet day today for data, so markets may start off the week on a quiet note. Key scheduled market moving events include bond auctions throughout the week.

Equities: The nasdaq is once again leading the indices today, trading up 11.50 points to 2946.50 (JUN13). 2930 is today’s pivot level, with 2880 marked as key support. We believe the Nasdaq will continue to march higher into the summer, and break 3000 soon. We still hold our key near term target of the SP 500 at 1640. The equity markets seem to be getting stronger and stronger, and wronging the analysts calling for an imminent correction up until this point.

Bonds: The JUN13 US 30 yr bond is down 6 ticks today, and below a very important price level of 148. As long as this market can stay below this level, we believe the bears might bring it down to 145 or lower, especially in light of the most recent jobs report. We don’t foresee a monster sell-off until the Fed officially announces some verbiage indicating a slowing of their own bond/asset purchases. However, the bonds could start to trend lower if the US data continues to be strong, and most especially if the unemployment rate continues to tick lower. This is the key variable for the bond market.

Commodities: It looks like gold has had a lot of trouble staying above the $1480 level. JUN13 gold is up around $5 this morning, trading just below $1470. We would not be surprised to see this market slide lower, as it has not managed to find new buying interest at these levels. Crude oil has had a very strong rally recently, showing that geopolitical fears can surmount even very large supply figures. We have seen that when geo-political fears surface, “all bets are off” for technical analysis.

Currencies: We would not be surprised to see more US dollar strength going forward. The Euro currency has been in somewhat of a trading range as of late, but we believe the market is vulnerable to a move to the downside, as the ECB is being very dovish in their policy actions and statements.  We see the Euro’s first support at 128.50.