S&P 500 (Sep 10) INTRADAY
Review U.S. stocks fell, sending the Dow Jones Industrial Average below 10,000 for the first time in seven weeks, as concern about Spain’s fiscal stability and a slowdown in manufacturing wiped out early gains trig-gered by a drop in jobless claims. The E-mini S&P touched our entry at 1058.50 and reached our first target at 1044.00.
Strategy Looking ahead all eyes are on Bernanke, speaking in Jackson hole on the outlook of the U.S. economy. Bernanke is like-ly to elaborate on how much Fed officials or staff economists have reduced their forecast for 2011 growth. We believe the market will be disappointed if he does not provide some degree of clarity on possible plans for injecting more monetary stimulus as uncertainty continues to plague the market. Q2 GDP is expected to be revised down this afternoon. Our strategy for today is neutral as movement hinges on Big Ben. We predict that if no clear commitment or di-rection is given this afternoon the S&P will break 1040.00
Alternative Scenario Bernanke commits to extended QE supporting risk assets in the short term.
EUR/USD INTRADAY
Review The euro rose remained in a sideways range yesterday touching our entry long at the low of the range at 1.2669 before rallying to the high of the range 1.2764, just below our target.
Strategy Looking ahead we are expecting a continuation of yesterday’s uptrend due to a divergence in ap-proaches between Jean-Claude Trichet of the ECB and Ben Bernanke of the Fed. On the back of good mac-roeconomic data from Europe, specifically from Germany Trichet is likely to have a more hawkish tone than Bernanke who still strug-gles to stimulate the U.S economy. Lower revised GDP figures could also dampen demand for the dollar. A push higher this morn-ing in the Euro has already been attributed to Chinese buyers. Giv-en the opportunity we look to enter long at yesterday’s low of 1.2665. However, the market will be watched carefully because if no clarity comes from Bernanke not only could the dollar remain comparatively strong but a flight to quality will move money away from the riskier Euro.
Alternative Scenario No clear statement of intent from Bernanke to reflect divergence in economic out-look between the U.S. and E.U. Stocks move lower along with the Euro below 1.2609 support.
Crude Oil (Oct 10) INTRADAY
Review Crude oil fell, heading for its third weekly decline as a slowdown in U.S. manufacturing added to concerns that the economic recovery is faltering. Prices have lost 0.5 percent this week following gains in U.S. crude inventories. The U.S. economy probably slowed in the second quarter even more than initially estimated as companies reined in inventories and the trade deficit widened.
Strategy Looking ahead we are expecting a continuation of the recent downtrend after bearish oil and gas-oline inventories and disappointing U.S. macroeconomic data that may continue to curb demand in the world’s largest energy con-sumer. We expect Q2 figures to be revised down which may put further pressure on the commodity, although to a large extent this is already priced in. The oil market is bearish, we believe if $70.00 gets broken to the downside we it move substantially lower.
Alternative Scenario Bernanke commits to further support brightening the outlook for growth in the short term.
