S&P 500 (Sep 10) INTRADAY
Review U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for the fifth time in six days, as concern eased that Europe’s sovereign debt crisis will derail the global economic recovery. JPMor-gan Chase & Co. and Bank of America Corp. gained at least 1.2 percent and European stocks rose on im-proved demand for Portuguese and Polish bonds. Goldman Sachs Group Inc. added 1.6 percent as KKR & Co. and Perella Weinberg Partners LP were said to be in talks to hire its U.S. proprietary trading group. Ap-ple Inc. rallied 2 percent after UBS AG raised its profit and share-price estimates. The S&P 500 rose 0.7 percent to 1,099.25 at 4:30 p.m. in New York.
Strategy Looking ahead we are expecting a continuation of yes-terday’s move higher as we think reaction to the renewed concerns about Europe has been overdone. This has been supported by suc-cessive positive bond auctions in the euro zone. Our long-term view is still bullish as we think the global economy is improving, even if at a slow rate. We think investors may look at the current levels a long term buying opportunity. On the economic calendar for today, we have the U.S. trade balance and Jobless claims. Although this could generate some short-term volatility we advise traders to limit their trades today.
Alternative Scenario Negative fundamental news flow could lead to a break-out of the previous support at 1,092.00 opening the way for a more aggressive move to yesterday’s low at 1,086.25.
EUR/USD INTRADAY
Review The euro gained after demand rose at a Portuguese bond sale and Poland’s auction of five-year debt attracted the strongest bids since 2008. Portugal sold 1.04 billion euros of bonds maturing in 2013 and 2021. The 2021 securities drew bids for 2.6 times the amount offered, compared with a bid-to-cover ratio of 1.6 in the March sale. European central banks bought Greek, Irish and Portuguese bonds, as the securities’ premiums to German debt surged for a third day. The euro gained 0.3 percent to $1.2718.
Strategy Looking ahead we are expecting a retracement of some of the recent downtrend and we are looking to buy just above yes-terday’s low at 1.2659 after a very well received Irish bond auc-tion and positive comments from ECB’s Mersch. He said that we are now seeing first signs of some broad-based recovery in Euro-zone and that ECB says gradual phasing out of emergency measures. We think this is a good response to the renewed con-cerns over fund-raising by European banks and governments that we have seen in the last couple of days.
Alternative Scenario Negative euro-zone fundamental news flow could lead to a break-out of the previ-ous support at 1.2588 opening the way for a more aggressive move to 1.2480.
Crude Oil (Oct 10) INTRADAY
Review Crude oil rose for the first time in three days as equities gained and the dollar retreated against the euro, boosting the appeal of commodities as an alternative investment. Oil increased as much as 1.6 percent as stocks climbed in the U.S. and Europe amid optimism that the global economic recovery is strengthening. Crude oil for October delivery rose $0.58 to $74.67 a barrel at 2:30 p.m. on the New York Mercantile Ex-change.
Strategy Looking ahead we are predicting a continuation of yes-terday’s uptrend as we are expecting a drop in oil and gasoline in-ventories that may positively affect the crude price in the short term. Market Consensus is for a build of 1.0 million barrels in oil. Howev-er, we are expecting a drop in supplies after the significant decrease in inventories reported by the American Petroleum Institute last night. We have seen this figure have a correlation with today’s in-ventory figure. Also, a rebound in Equities and EUR/USD may pro-vide a bit of support for oil.
Alternative Scenario Negative fundamental news flow could lead to a break-out of the previous support at $74.34 opening the way for a more aggressive move to Tuesday’s low at $72.65.
