The session on Friday will be fairly quiet, but the German Retail Sales number could give a little bit of a boost or put a bit of weight upon the DAX and the EUR/USD pair. With that, we believe that the longer-term trends should continue, so we feel that any knee-jerk reaction could provide a trading opportunity.
We believe that the EUR/USD pair will continue to struggle at the 1.26 level, and that any time we rally on the short-term chart it is a selling opportunity and we will be buying puts in order to take advantage of the longer-term trend. We have no interest in buying calls at all, as the EUR/USD pair has been so soft.
The DAX on the other hand has been extraordinarily strong, and we are getting dangerously close to the €10,000 level. With that, we feel that the market is more than likely going to be pulling back from here, but that should bring value to the table, thereby allowing us to buy calls at lower levels in order to take advantage of that value.
Looking at the precious metals markets, we believe that they will continue to go lower, with most notably gold struggling at the massive resistance barrier that we see between the $1200 level on the bottom, and the $1250 level on the top. We think that there is so much noise between us two areas that sooner or later the downward trend will continue. If we see that, we will not hesitate to buy puts as the US dollar continues to strengthen over the longer term, and of course demand for metal in general is struggling.
We still like US indices in general, but obviously can’t do anything with them until Monday. Pullbacks will continue to offer value, and we do believe that buying calls every time the market step will be the way to go going forward in the S&P 500, the Dow Jones Industrial Average, and of course the NASDAQ.