Hello All,
My original projections for Monday came in nearly perfectly and the reaction to China's surprise news was a bluff. It seems as though the markets have put in major reversals for the most part, and if you have yet to get short I have new entries listed below. With our Fed announcement due on Wed. it is possible that we may not get too much of an additional breakdown tomorrow, but regardless I think we'll want to get aboard this ride early.
1) Sell Sept Emini S&P futures at the market (1111), with a 1123 stop. Exit 1093. Given the breakdown in the euro, gold, oil, and stocks I would suspect additional weakness tomorrow. We should see a breakdown below 1100, but I doubt the market will close below it so we'll want to pull profits prior to the Fed announcement. The market hit the 24% retracement level of the rally from early June, and the next 38% retracement level is at 1092. This 1092 level also matches precisely with a 38% extension of todays fall, but it is possible that we may only reach 1097 as a 24% extension.
2) Sell Sept. Eurocurrency futures at 1.2389, with a 1.2508 stop. Exit near 1.2000. It seems as though the upward correction is over and we should see a continual decline of the euro through the rest of the year. We'll use a big stop just in case we get a surprise on Wed. First level of support is in the 1.22 region, once that goes look out below. July options expire on July 9th and I would suspect to trade right around the 1.19 region to prevent option sellers from paying up much below or above that region.
3) Buy Aug Crude futures at the market (77.90), with a 77.40 stop. Exit 79.15. Reverse at 79.15, and sell another contract at 79.50 if it reaches, using a 80.60 stop. Aug. Crude oil signaled a break down, but has support at 77.60. The July contract expires tomorrow so we may get some volatility, and we'll want to use that opportunity to add shorts. The buy side of this trade is against the days trend, but we'll use it as a hedge against our short s&p play just to be on the safe side.
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.
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