Hello All,
Consumer confidence hits a two year low, and stocks lean on the Fed minutes as expectations for additional stimulus from the central bank increases. Gold rallies $50 on the day based on loose monetary policy, and with this kind of momentum we may be back above $1900 in no time. The S&P was hammered at the close, which may be a light indication that this corrective pattern may be close to completion. Another scenario would allow for the S&P to try and test the neckline around 1260, which coincides roughly with the moving average; but given the hefty selling at the close we may end the month with a volatile day lower. On the currency front, Italian bond auctions didn't fare well, and the Euro paid the price while speculation for rate increases over the next 6-9 months have diminished drastically. We have eurozone inflation and unemployment data due for Aug. being released overnight, so it should be a bumpy ride lower to close out the month. As for energies, API data just released showed a whopping build of 5.1 million barrels of crude oil for the week, and if DOE is anywhere near it we would expect a big drop tomorrow. Technical patterns are still in-tact as we kissed the previous high today and this could be part of a congestive wedge that would require a sell-off then one more attempt at the $89 level before an ultimate break lower. Investors may situate themselves on the sidelines early this week ahead of unemployment data on Friday, and after the few weeks we've had I'm sure everyone is ready to enjoy the 3 day weekend.
1) Sell Sept. Emini S&P at the market (1206.25), with a 1218 stop. Exit 1188.50.
2) Sell Oct. Crude at 88.75, with a 90.20 stop. Exit 86.45.
3) Stand aside Euro.
Best,
Arman Vahdatinia
President, Chief Market Strategist
1-877-338-EXPO [3976] ext. 25
*There is a substantial risk of loss trading futures and options. Past performance is not necessarily indicative of future results.
