Hello All,
We have a number of reports along with earnings due tomorrow as the markets could be all over the place. Oil hit a fresh 2 week high, the Euro hit a 9 week high, and stocks were practically unchanged. The release of the FED minutes raised concerns about the economy, yet Intel's earnings spurred optimism. Oil inventory data showed a draw of 5.1 million barrels which was enough support to finish upward patterns. The Euro almost reached our 1.2820 target, and we can say that the S&P has basically hit our 1100 target. So all in all, patterns to the upside are complete, but given the 8 reports that will release tomorrow, we will attempt to sell higher levels if we can get lucky.
1) Sell SeptEmini S&P at 1106, with a 1114 stop. Hold into next week. At the best, the market may be able to extend 50% of todays range to 1107, which should be safe enough to sell. The odd action of the day was the rally in treasuries, as I would have expected stocks to fall out of bed in an equal fashion. Will stocks be late to the party, or did bonds jump the gun? We'll wait for better confirmation and that may allow for our target to come in.
2) Sell Aug. Crude oil at 77.60, and another at 78.60 if reached, with a 79.30 stop. Exit next week. The initial bullish reaction to the inventory report was easily offset after the Fed minutes were released. The negative outlook on the economy may have been enough to turn this market around. We'll hope to sell closer to the days high, but it's never easy to top-pick. The market has a downward trending channel aligned by the last 3 highs below $80, so we may not get the opportunity to sell higher.
3) Sell Sept.Euro at 1.2820, with a 1.2925 stop. Exit next week. As the Fed lowered the US economic outlook, the Euro strengthened. One can make a case for a simple ABC correction off the 1.19 low on the 6th of June. We rallied 584 pts, retraced 292 pts, then rallied another 584 pts. The currently rally completed a 50% extension of leg A at 1.2768 which completes the ABC pattern. I'm all for stopping out perfect patterns, so we'll try and enter slightly higher with a 62% extension at 1.2837.
We'll keep our finger on the trigger as we may not get the opportunity to sell higher on all 3 markets. Current levels are technically sounds levels to enter swing trades, but we'll try and maximize our risk/reward by holding out for a tad longer.
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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