Hello All,
Wall Street staged a comeback after an early dip in anticipation of good earnings from Apple and speculation of changes in monetary policy on excess bank reserves, reducing the interest rate from 0.25% to 0. We initially had a dip in equities as Goldman Sachs reported a big drop in quarterly earnings, along with weak revenues reported from IBM. The rally afterwards was pinned on the surprising rumor in reference to Bernanke's address on Capitol Hill over the next couple of days. As we do not have our next FOMC meeting until the beginning of August, this would be an aggressive move on Bernanke's part portraying his ability to take emergency action between FOMC meetings, but I would have to think it is premature. Many analysts believe that our economic recovery is on track, and given the majority of earnings reported thus far, I would have to agree. The Euro looks like it has put in a temporary high ahead of the stress test results as traders locked in profits on the recent gains. This was the 3rd attempt above 1.30 only to be shot down. We will have to await Fridays news to see if we will attempt one more new high or retrace back to the mid 1.20's. The questionable factor is that if all the banks fair well many will assume that the tests were not realistic, so I would have to assume a slightly negative connotation regardless of the outcome. Crude oil rallied back up to resistance as the August contract went off the board in conjunction with the rally in equities. We have to note that the market is still below resistance, and API only reported a draw of 240k barrels this past week. We'll hang onto our crude shorts as a hedge against a new position on the S&P. See below....
1) Buy Sept. Emini S&P at 1070.25, with a 1064 stop. Exit 1087. Then reverse, Sell Sept Emini S&P at 1087, with a 1096 stop. Exit late Thursday. The market surely held the 1050 support level I had my eye on, but I expected all of todays action to be spread over a few days, so now that we've hit fast-forward we will attempt to play the technical chop amidst the mixed fundamentals.
2) Sept Euro - stand aside.
3) Hold Sept Crude oil shorts from 77.20, move protective stop to 78.35. Exit 75.00. We will have to keep an eye on the dollar overnight as a precursor of support or resistance prior to the DOE report. We will give her some room for an initial spike if we get a less favorable DOE report, but after the fact the market should begin to sell off.
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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