S&P 500 (Sep 10) INTRADAY
Review U.S. stocks fell, erasing most of the previous days gains as a slower- than-estimated increase in American personal incomes fuelled concern that the economic rebound is slowing. The S&P 500’s decline was led by financial and consumer discretionary stocks, with gauges of both industries falling at least 1.7 percent. The Standard & Poor’s 500 Index dropped 1.8 percent to 1,044.75 at 4:30 p.m. in New York.
Strategy Looking ahead we are expecting a consolidation of the recent sell-off based on still negative market sentiment and on con-tinued concern of a slowdown in the US economy. We are expecting mixed economic data for today as a pull back in the Chicago PMI and Case-Shiller home price index may partially offset a slightly better Consumer Confidence. Also, today’s FOMC minutes should be closely watched in order to better assess the current U.S. macro-economic picture. We think the situation is extremely vulnerable at the moment and this morning’s new high for the Bund confirms this risk-aversion scenario.
Alternative Scenario Strong economic data may lead a retracement of some of the recent sell off and a move back above the Pivot at 1054.00 with yesterday’s high at 1072.75 as a first target.
EUR/USD INTRADAY
Review The euro dropped against the greenback after American consumer purchases increased 0.4 percent in July, the most since March, Commerce Department figures showed yesterday in Washington. Incomes in-creased 0.2 percent, less than projected. The euro was at 1.2664 at 4:30 p.m. in New York.
Strategy Looking ahead we are expecting some retracement of yesterday’s downtrend after better than expected Italian consumer confidence and retail sales and slightly better German unemploy-ment change at -17,000 from -20,000 in July. We think the Eurozone is in a slightly better shape compared to the U.S. economy at the mo-ment and this may favour the euro against the dollar in the near term. Also, today’s FOMC minutes should be closely watched after Federal Reserve Chairman Ben S. Bernanke said last week the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery and that further securities purchases may be war-ranted if growth slows.
Alternative Scenario Negative Euro zone fundamental news flow could lead to a break-out of last week’s low at 1.2588 opening the way for a more aggressive move to S3 at 1.2536.
Crude Oil (Oct 10) INTRADAY
Review Crude oil fell for the first time in four days as slower-than-forecast growth in personal incomes in July heightened concern the economy is struggling to recover. Oil fell from the highest level in more than a week after the Commerce Department reported that incomes rose 0.2 percent, less than the 0.3 percent medi-an consensus. The dollar climbed against the euro, curbing the appeal of commodities as an alternative in-vestment. Oil for October delivery fell 47 cents, or 0.6 percent, to settle at $74.70 a barrel.
Strategy Looking ahead we are expecting a continuation of the recent downtrend as bearish oil and gasoline inventories and disap-pointing 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 $72.05 as a first target if today’s eco-nomic data will continue to show a bearish scenario.
Alternative Scenario Strong economic data may lead a retracement of some of the recent sell off and a move back above the Pivot at $74.77 with Friday’s high at 75.60 as a first target.
