Markets Cautious Even after Bernanke Speaks

U.S. markets posted losses, small ones, as there is talk markets are a bit overbought. The S&P 500 is now on a two day losing streak even though we got some good corporate results.

Federal Reserve Chairman Ben Bernanke spoke at the National Economists Club dinner overnight and stated the Fed would maintain its easy monetary policy for the foreseeable future or as long as the economy needs it. They will only reduce the asset purchases once the job market shows real continued improvement.

It will be very interesting to see what the minutes from the last FOMC meeting say. There are some economists who are not surprised if there is some talk of tapering beginning in December. With that said Chicago area chief Charles Evans stated he is “no rush” to begin tapering as he addressed thee Illinois Bankers Association Midwest Bank Leaders Conference.

STOCKS

The DJIA faltered a bit. This comes the day after rising above 16,000 for the first time in history and after a four day winning streak. The fluctuated around the flat line all day and closed down nearly nice points at 15,967.03. The S&P 500 lost 3.66 points to finish at 1,787.87. The day before, Monday, the index had gone above 1,800 for the first time. The Nasdaq Composite’s six day win streak ended yesterday as the index shed 17.51 points to close at 3,931.55.

Would seem investors are being cautious waiting on the FOMC minutes.

The Asian markets are all trading around the flat line despite Bernanke’s dovish remarks The Nikkei is back up, showing a gain of about 8 points. The yen has been weakening as the USD/JPY has moved above $100. We also got better than expected trade data for last month. The Shanghai Composite is also flat this morning as investors digested the news that China will make it easier to trade the Yuan. The Yuan/USD was steady near $6.0905 at the time of this report.

In Australia the ASX is down 0.88 percent and was at its lowest level in over a month at one point. We are seeing weakness in financials and resources.

CURRENCIES

The Yen continues to weaken, which is great news for Japan’s equities.

The USD/JPY (100.033) hit a high at 100.20. We break above that then we can target 101.00. Above 101 lies 105.00.

The GBP/USD (1.6108) has been moving up from 1.588 nicely. We will be targeting 1.63 in the coming sessions. The AUD/USD (0.9397) is stuck in a range trade pattern from 0.935 to 0.9450. EUR/USD (1.3548) has risen 2.79 percent since the November 7 low near 1.3301. We are now testing 1.35 and a break higher is bullish for 1.3600. If it holds we could dip and test 1.3450.

COMMODITIES

WTI Brent (107.17) has bounced up nicely. While it looks a little mixed for the moment we can still aim for 110.00 while above 105. WTI Crude (93.65) has been moving up steadily. A rise past 95.50 confirms a bottom in place and we turn bullish.

Gold (1273.70) is still below 1275 and we remain near term bearish to target 1250. Copper (3.1675) hit a low at 3.125 then recovered. If support at 3.10 continues to hold we could see some gains.

TODAY’S OUTLOOK

Today we will hear the FOMC minutes from October’s meeting and will get a plethora of data. Retail sales, CPI, business inventories, and existing home sales will keep markets busy today.