S&P 500 (Sep 10) INTRADAY
Review U.S. stocks and oil advanced, erasing early declines, and Treasuries reversed gains amid specula-tion this month’s retreat in riskier assets has gone too far relative to prospects for the economic recov-ery. Earlier declines came after new-home sales unexpectedly slumped to a record low and durable-goods orders increased less than estimated. The Standard & Poor’s 500 Index climbed 0.5 percent to 1,055.25 at 4:30 p.m. in New York, snapping a four-day losing streak and rebounding from a seven-week low.
Strategy Looking ahead we are expecting a continuation of the recent sell-off based on negative market sentiment and on continued concern of a slowdown in the US economic. We think the situation is extremely vulnerable and today’s jobless claims due at 1:30 p.m. should be closely watched in order to get a better direction ahead of next week’s non-farm payrolls.
Alternative Scenario A strong jobless claims reading may lead a retracement of some of the recent sell off and a move back above Tuesday’s high at 1065.75 with R2 at 1070.50 as a first target.
EUR/USD INTRADAY
Review The euro rose against the greenback after U.S. new-home sales dropped in July to the lowest on record, adding to concern the world’s largest economy is losing steam. Purchases of new homes in the U.S. last month fell to an annual pace of 276,000, the weakest since data began in 1963, Commerce Department figures showed yesterday in Washington. The dollar fell 0.2 percent to $1.2656 per euro after touching $1.2588 on Tuesday, the strongest since July 13.
Strategy Looking ahead we are expecting a continuation of yes-terday’s uptrend after better than expected German consumer confi-dence and positive sentiment about the Fed’s annual symposium at Jackson Hole, wich starts today. Federal Reserve Chairman Ben S. Bernanke, European Central Bank President Jean-Claude Trichet, and Bank of Japan Governor Masaaki Shirakawa are likely to try to reassure markets that their policy will sustain recovery, spurring de-mand for higher-yielding assets. This may provide a bit of a lift for the euro in the short term.
Alternative Scenario Negative Euro zone fundamental news flow could lead to a break-out of yester-day’s low at 1.2609 opening the way for a more aggressive move to S2 at 1.2552.
Crude Oil (Oct 10) INTRADAY
Review Crude oil rose from an 11-week low after the dollar slipped against the euro for the first time in six days, bolstering the appeal of commodities to investors. Oil climbed 1.2 percent as the greenback declined on a report showing that sales of U.S. new homes dropped in July to the lowest level on record. Prices tum-bled earlier when an Energy Department report showed that crude and gasoline stockpiles surged last week as demand fell. Crude oil for October delivery rose 89 cents to settle at $72.52 a barrel.
Strategy Looking ahead we are expecting a continuation of the recent downtrend after bearish oil and gasoline inventories and dis-appointing U.S. macroeconomic data that may continue to curb de-mand in the world’s largest energy consumer. Our short-term view for oil is bearish as a very weak stock market in conjunction with an increase in inventories may add some pressure to oil. We think the correlation between equities and oil is pretty strong at the mo-ment and we are looking at $71.33 as a first target if today’s jobless claims will continue to show a bearish employment scenario.
Alternative Scenario A strong jobless claims reading may lead a retracement of some of the recent sell off and a move back above Monday’s high at $74.45 with Friday’s high at 74.98 as a first target.
