Market slides after with Bernanke's comments
S&P – Stock index futures are pointing higher on plans that President Bush will unveil a new stimulus package today. In testimony before the Finance Committee yesterday, Fed Chairman Ben Bernanke urged the President and Congress to take measures to get consumer spending and the housing market back on track. This caused the market to slide yesterday, but the fact that both Bush and Congress responded gave investors hope that new legislation may aid an economic rebound. GE and IBM raised their overseas growth forecasts, suggesting that large multinationals may be able to cope with a domestic downturn and use the slumping Dollar to their advantage. Leading indicators and consumer confidence figures will be released at 9:00 AM CST. Leading indicators are expected to show a -0.1 reading, but the figure may surprise to the downside given the grim results in recent economic releases for December. Consumer confidence is expected to slide to 74.5 percent, down from 75.5 the prior period. The confidence figure may also surprise to the downside due to all of the bad press the economy has received recently. Yesterday’s sharp slide gave confirmation to Wednesday’s bearish breakout on the March e-mini S&P chart and may be an indication of more downside in the near future. Even with the chart rally pre-market, the index would have to climb another 40 points before technical indicators would turn positive in the short term, and the market would have to rally over 100 points for a longer-term shift. Momentum is showing bearish divergence from the RSI, indicating today’s rally may be a "dead cat bounce." Support comes in at 1319.50, 1299 and 1264.25, while resistance can be found at 1374.50, 1409.50 and 1430.
Crude Oil – The Oil market has rebounded in tandem with stocks this morning in hopes that a stimulus package may help boost demand. The market is also aided by OPEC backing off of recent comments that output may be increased. Nonetheless, fundamental factors outside of geopolitical events remain bearish in the near term. Consumers are showing their shaky outlook on the economy at the pumps, with retail gasoline sales falling in December. This could lead to larger builds in gasoline stocks and the lower refinery utilization points to possible builds in supplies in the coming weeks. Weather maps for the next 90 days point to higher-than-normal temperatures across much of the nation, including the Northeast, which mainly uses Heating Oil instead of Natural Gas. The March Crude chart shows further consolidation, pointing to a bearish bias. Momentum is being outpaced by the RSI, suggesting a bearish near term bias. How the market behaves if and when it reaches the key 87.00 support area will likely determine the longer-term market direction. Support comes in at 88.85, 88.12 and 87.15, while resistance can be found at 90.55, 91.52 and 92.25.
Gold – Gold futures are holding their heads above water this morning, despite weakness in other precious metal prices and the rally in equities. Fresh buying activity remains strong, but has been overpowered by profit-taking in recent trading sessions. Physical demand remains strong, which has stopped a larger correction. The CPI report showed inflation growing at a much quicker pace than previously thought, which could keep demand strong. Fed fund futures are now pretty much factoring a half point rate cut later this month when the FOMC meets, and there is an increased likelihood of a three quarter point cut, which could lead to an extended slide in the Dollar. The recent reversal pattern on the daily chart suggests the market may test the first Fibonacci retracement, which coincides with early November highs of 855.00. Momentum is outpacing RSI, indicating that the weakness over the past few sessions has been a healthy correction. Support comes in at 873.30, 866.10 and 857.00, while resistance can be found at 889.60, 898.70 and 905.90.
Rob Kurzatkowski, Commodity Analyst
