S&P 500 (Sep 10) INTRADAY
Review U.S. stocks fell for the first day in five, ending the longest streak of gains for the Standard & Poor’s 500 Index since July, on concern the European debt crisis may worsen. Bank of America Corp. and Citigroup Inc. fell at least 2 percent as European banks slid on concern stress tests understated potential loss-es from sovereign debt. ConocoPhillips and Chevron Corp. slumped more than 1.2 percent as crude oil fell the most in a week. Oracle Corp. rallied 5.9 percent after naming Mark Hurd, former chief executive officer of Hewlett- Packard Co., as president. The S&P 500 lost 1.2 percent to 1,091.25 at 4:30 p.m. in New York, halting a four-day rally.
Strategy Looking ahead we are expecting a consolidation of yes-terday’s downtrend. However, we are not looking for a strong sell-off as investor may look at a long term buying opportunity above our second target at 1,078.50. This could potentially limit the down-side for today’s session. We are expecting a choppy session at least until the release of the Fed’s Beige book that may provide some in-teresting comments about the U.S. economic activity. Although this could generate some short-term volatility we advise traders to limit their trades today.
Alternative Scenario Positive fundamental news flow could lead to a break-out of R2 at 1,113.50 open-ing the way for a more aggressive move to the 61.80% Fib Level at 1,131.50.
EUR/USD INTRADAY
Review The euro slid the most in more than two weeks against the dollar after the Wall Street Journal said European stress tests for banks understated some holdings of sovereign debt in the wake of Greece’s budget crisis. The Swiss franc reached its strongest level since the euro was introduced in 1999. The euro fell as much as 1.4 percent to $1.2692, the most since Aug. 11
Strategy Looking ahead we are expecting a consolidation of yesterday’s strong downtrend and we are looking to buy at last week’s low at 1.2625 after well received German and Portuguese Bond Auctions. We think this is a good response to the renewed concerns over fund-raising by European banks and governments that we have seen in the last couple of days. We are expecting a choppy session for today at least until the release of the Fed’s Beige book that may provide some interesting comments about the U.S. economic activity. This could affect the dollar against the eu-ro and provide some short-term volatility.
Alternative Scenario Negative euro-zone fundamental news flow could lead to a break-out of S2 at 1.2586 opening the way for a more aggressive move to S3 at 1.2495.
Crude Oil (Oct 10) INTRADAY
Review Crude oil fell the most in a week as the euro tumbled against the dollar on speculation that Eu-rope’s debt crisis may worsen. Oil dropped for a second day after German factory orders unexpectedly de-clined in July, causing the euro to weaken the most since Aug. 11. Crude for October delivery lost 51 cents, or 0.7 percent, to settle at $74.09 a barrel on the New York Mercantile Exchange, the biggest single-day de-crease since Aug. 31.
Strategy Looking ahead we are expecting a consolidation of the recent downtrend as concerns about an increase in oil inventories in conjunction with a weak equity markets may add some pressure to the oil price. Crude failed to break out the $75.00 handle last week and this represents a bearish technical signal in our view. Also, gas-oline and motor fuel supplies have reached very high levels to justi-fy a crude price above $75.00. We are expecting a quiet session for today with low risk appetite for commodities.
Alternative Scenario Positive fundamental news flow could lead to a break-out of last week’s high at $75.60 opening the way for a more aggressive move to R3 at $76.95.
