The E-mini S&P 500
is pulling back after testing a short-term retracement level at
1074.50. Increased demand for higher risk assets helped drive up the
equity markets into the mid-session, but comments from Fed Chairman
Bernanke and Beige Book commentary encouraged investors to take
profits, driving the indices off their highs.
The indices are
turning negative late in the session. This weakness seems to be
corresponding with a sharp break in commodity-linked currencies and the
Technically the June E-mini S&P 500 posted a daily
closing price reversal. The 1041.25 low was close to the recent bottom
at 1036.75, making it appear on the charts as if a secondary higher
bottom may be forming. The trade through 1063.25 confirmed the reversal
bottom, triggering a short-covering rally to 1074.50 to 1082.25.
1045.00 will be a key pivot number until June 14th. A close under this
price could trigger the start of a break to 1004.00 by June 23rd.
Treasury Bonds are making a recovery due to the weakness in the equity
markets. Earlier today, the T-Bonds were trading weaker because of the
stronger equity markets and todayâ€™s $21 billion U.S. Treasury Note debt
sale. There is also rising speculation that the Fed may be preparing to
raise interest rates. On June 7th, Fed Chairman Bernanke said the Fed
will hike before the economy returns to full employment. This statement
seemed to have stopped the rally this week as traders pared long
Technically, the T-Bonds found support at a 50%
level at 123â€™22 before the late session break in U.S. equity markets
helped pare losses. This afternoon the Treasury reported that demand
for its 10-Year Treasury Notes was about average.
traded sharply lower earlier in the trading session. Investors took
profits after the recent run-up because of greater demand for equity
prices. Technically this market stopped inside a retracement zone at
$1226.30 to $1219.70. A late session break in stocks is helping gold to
pare earlier session losses.
Increased appetite for risky assets
helped drive September Crude Oil higher this morning. The short-term
range is 69.62 to 77.84. This range created a retracement zone at 73.64
to 72.69. Holding this retracement zone helped trigger todayâ€™s
short-covering rally. A trade through 77.84 will turn the main trend to
Fundamentally, higher stock prices helped underpin crude
oil this morning. Additional support came from a weekly report showing
that inventories had dropped more than expected.
demand for higher risk assets and slight optimism about Euro Zone
finances are helping to boost the June Euro at the mid-session. Earlier
this morning, the Euro reached a high of 1.2072 before comments from
Fed Chairman Bernanke and the results of the Fed Beige book
strengthened the Dollar.
Higher equity and crude oil markets
helped drive up demand for riskier assets. This strength spilled over
to the Euro. In addition, traders were a little more optimistic about
the survivability of the Euro after the European Union finalized its
rescue plan. Although sovereign debt issues remain the major concern,
short traders felt it was necessary to pare positions on this news.
the Dollar pared losses against the Euro after the Fedâ€™s Beige book
indicated that the economy was improving mainly on rising consumer
spending although new concerns have been raised about the possibility
of a double-dip recession because of Euro Zone problems and the oil
spill. The Dollar reached its bottom against the Euro after Bernanke
said the U.S. economy is strong enough to withstand fiscal tightening
by the Fed.
Technically the Euro is still in a downtrend, but the
charts indicate there is room to the upside. Recently hedge funds and
large speculators have been shying away from selling weakness and have
been more comfortable with selling retracements. Watch for renewed
selling pressure once the Euro completes its retracement to 1.2164 to