Canadian Dollar reaches new highs
S&P – Stock indexes are slightly higher this morning on speculation that M&A activity will continue to blossom. Kirk Kerkorian indicated that he is shopping around different options for his majority stake in MGM, signaling that he may sell his shares. Meanwhile, Freemont General, a troubled California lender, announced that it will sell its commercial real estate unit. Today is a release-free day, and in fact no economic data is being released until Thursday, when the market gets Durable Goods, New Home Sales and Initial Claims numbers to mull over. The recent trend for the S&P since bottoming out in March of last year has been to sell off near the end of the month. This is a sign that while the majority of players in the market are bullish, they are uneasy about the high index levels, and therefore liquidating positions to take profits at month’s end. The June S&P formed a gravestone doji pattern on the daily chart yesterday near the upper end of the uptrend channel. This signals a near-term bearish technical bias, especially when coupled with an overbought 74 percent reading on the 9-day RSI. Momentum remains strong at +39.60. Support comes in at 1518.80 and 1504.50, while resistance can be found at 1533.00 and 1540.20.
Corn – Corn jumped on news that China may slow exports and possibly import Corn, which gives bulls hope of lower ending stocks. Fundamentally, nothing has changed for Corn and the bias is neutral to bearish. Both planting and crop health are ahead of last year’s pace, which is evidently on traders’ minds this morning, with the December contract falling 5½ cents overnight. The weather looks good across the Midwest, with the exception of some farmers in the eastern part of the growing region griping that the rains may miss them. There are also reports from areas in Iowa and Nebraska that the heavy rains that they have experienced may have an adverse effect on recently seeded Corn. December Corn remains in slow downtrend, with 350 being the critical support area – both technically and psychologically. Declines beyond the 350 mark may trigger stops, accelerating the downtrend. Momentum turned positive yesterday to come in at +11 ¾ and the RSI comes in at a neutral 60 percent. In addition to 350, support can be found at 354 ½, while resistance comes in at 384 ¼ and 401.
Bonds – Bonds bounced back in late trading yesterday, as the stock market failed to hold early gains. The recent climb by the Greenback is indicating that investors are following the Fed’s tightening bias, which has impacted fixed income adversely. The strong stock market and record high gasoline prices have added to the Bond market’s woes. Thursday does offer a ray of hope for debt holders, as very weak New Home Sales and Durable Goods numbers may force the Fed to rethink its strategy. Yesterday’s bullish doji on the chart signaled an upward bias for the day, which has not panned out thus far. The June contract has broken support at 110-00, with 109-06 the next downside target. Momentum comes in at a bearish -1-12 and the RSI remains oversold at 23 percent, which may help support prices. Support can be found at 109-23 and 109-06, while resistance comes in at 110-24 and 111-05.
