Hello All,
I think we've hit bottom folks. Metals, Energies, and the Euro should start recovering overnight and throughout the rest of the week. Stocks should put in a new high prior to Thursday, and with tomorrow's OPEC meeting, the only plausible surprise we may get is to the upside by limiting output.
1) Buy Mar. Emini S&P at 1108.25, with a 1100 stop. Exit 1119, with an extended target of 1122. Solid support is at 1104. Tomorrow will most likely be the only day with any real activity prior to the holidays. Nasdaq made a new high so it seems inevitable that the S&P should follow. Given the weakness in energies, metals, and the euro the market still held its ground, so I feel comfortable being long.
2) Buy Mar. Euro at 1.4245, with a 1.4198 stop. Exit 1.4485. The 38% extension of the retracement from Oct-Dec. lands us at 1.4231 which may prove to be tonights low. And the retracement of the extension brings us right under the 200 hour moving average at 1.45, and depending on how it reacts to that resistance level we may have the opportunity to reach 1.4650 into the beginning of January.
3) Buy Feb Crude Oil at 73.05, with a 72.35 stop. Hold until Thursday. The market has retraced 50% of its recent rally, and we may get to the 62% retracement level at 72.70, but would rather buy a little higher in case the S&P begins to rally early. OPEC's meeting tomorrow shouldn't provide any changes to current conditions. Lighter than average volume, they seem to be flushing out the weak longs. So we'll be patient as usual.
4) Feb. Gold. - should be putting in a low around the 1080 region, and rallying back towards 1120 over the next week. There are too many plausible support levels, so you'll have to play with a $15-20 stop.
Best,
Arman Vahdatinia
Futures & Options Strategist
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