The MBA says that home loan applications fell 3.3% in the week ending June 14. The FOMC statement offered little change from the prior statement and made no mention of any change to its bond buying program. Stocks traded modestly lower after the statement was released, but the market’s tone changed during Ben Bernanke’s press conference. In Bernanke’s prepared opening statement, he outlined a timeline for reducing the Fed’s bond buying program starting before the end of 2012 and completely ending all bond buying in 2013. In response, 10-Yr treasury yields surged above 2.3%, their highest level since March 2012, and the dollar soared against its rivals. Given this backdrop, traders sold stocks into the close.
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With the expiration of the June futures contract this week, our comments are switching to the September futures contract starting today (Sept. E-mini S&P 500 futures are trading about 6.00 points below June). Given the change to Sept., our technical levels noted in our commentary will also change. In terms of resistance, we look for today’s high @ 1649.00 to define near-term resistance. On the downside, we look for initial support to emerge near 1604. If 1604 breaks, we would look for the S&P 500 to target the 1550 area (a 38% retracement of the Nov. 2012/May 2013 rally. A 50% correction measures to 1513). It’s worth noting that Wednesday’s S&P 500 price action qualifies as a bearish engulfing line and the close on session lows suggests further downside on Thursday.
Thursday's Reports of Interest
5:30AM PT – Weekly Jobless Claims, prior = 334k, consensus = 340k, range = 333k to 345k
5:58AM PT – PMI Manufacturing Index Flash, prior = 51.9, consensus = 52.7, range = 51.8 to 53.0
6:45AM PT – Bloomberg Consumer Confidence Index
7:00AM PT – Existing Home Sales, prior = 1.97M, consensus = 5.00M, range = 4.95M to 5.07M
7:00AM PT – Philadelphia Fed Survey, prior = -5.2, consensus = -1.0, range = -3.5 to 2.9
7:00AM PT – Leading Indicators, prior = 0.6%, consensus = 0.2%, range = 0.0% to 0.5%
10:00AM PT – 30-Yr TIPS Auction