The world remains focused on the Euro and for due reasoning. Standard & Poors cut Spains credit rating this morning, which led to an initial drop across the board, but we must keep in mind that the rating wasn't reduced by neither Moody's or Fitch. Whether Portugal or Ireland will be the next shoe to drop, I believe the 'news' has already been factored into the market. We have had enough upside momentum in the S&P, Crude, and Euro to mount a plausible reversal. It remains in the hands of Germany's Angela Merkel to decide when to actually put the bailout into action. Roughly 60% of Germans are against the bailout, yet the Germans know that if they do not act it will hurt the euro as a whole which in turn hurts Germany. We must compare Greece's $357 billion dollar economy at 2.6% of the euro zones $13.6 trillion dollar economy and to Germany's $3.65 trillion dollar economy. There are talks now that the 100-120 billion dollar bailout may be increased to as much as 800 billion euros to encompass all that may come forth. It doesn't seem to be a matter of 'if' rather a matter of 'when' the bailout will be approved. "Why the fire department has been scratching its head instead of operating the pumps, I don't understand" said former German foreign minister, Joschka Fischer. The cost of not acting at this point in time is far greater than the cost of the bailout. This reminds me of the first time we tried to pass our $700 billion bail out package, upon failure we lost $1 trillion in stock value in 1 day. The ramifications are evident, and it may have very well been a different story had their not been elections coming up, but I believe that Germany can wait no longer. There is a good chance that we will receive favorable news overnight that will lead to a recovery in the euro to 1.37-1.39 over the following 2-3 weeks.
The S&P has support at 1186 and 1179, with resistance at 1195 and 1204, breaches of these levels will lead to new highs towards 1222 and 1234. The Euro has support at 1.3160, with resistance at 1.3231 and 1.3285, a breach of these levels will lead to 1.3442 and 1.3538. Crude's inventory report showed a build of 1.9million barrels compared to API's build of 5.4 million barrels. Regardless of a build or draw the market keeps buying it up. Crude has support at 82.10, with resistance at 84.06, a breach of this level would lead to 85.27.
Big stops are necessary to trade futures in these conditions, but would be safer to buy on breakouts.
Best,
Arman Vahdatinia
Futures & Options Strategist
1-877-338-EXPO [3976] ext. 25
www.ExpoFutures.com
*There is a risk of loss trading futures. Past performance is not indicative of future results.




