During the session on Thursday, we see very little coming out of Europe as far as economic announcements. However, once we get to the United States we see the Core Durable Goods Orders month over month number coming out, which of course can move the stock markets and the US dollar in general. The anticipated number is 0.7% for the month, and should affect the S&P 500, the Dow Jones Industrial Average, and the NASDAQ as it will be the main focus of the session.
It appears that the EUR/USD pair is still trying to break down below the 1.28 level at the time of writing, but we recognize that there is a thick support zone in this region. It’s going to take something special to break down, although it’s looking more likely now. If we do break down below the 1.2750 level, we think that the market will then start heading towards the 1.25 handle next.
S&P 500 looks like it’s trying to pick up a little bit of steam, but in our opinion we are still going to see consolidation overall. With this, we feel that the 2020 level, and probably even the 2010 level will keep the market somewhat subdued. Short-term opportunities as far as buying calls are concerned have shown themselves, but for longer-term traders, you can expect more sideways action.
The USD/CAD pair continues to look relatively strong, and we believe that the market is heading to the 1.12 handle. If the Core Durable Goods Orders number comes out better than anticipated, this market should head to that region next. We still see the 1.10 level as a bit of a floor in this marketplace.
The European indices in general look fairly cheap, so we believe in buying calls on dips as they appear. We particularly like the DAX, as well as the CAC at the moment. We recognize that the Nikkei continues to strengthen our time, and should eventually hit the ¥20,000 level. We would employ the same strategy in Japan as Europe, simply buying value as it appears in picking up calls every time we did have and show signs of support.
