With Monday being a holiday for most of Western Europe, the markets were fairly quiet. However, the S&P 500 got quite a bit of bullish momentum going, as we tested the 2080 handle. We believe that the market breaking above that area would in fact drive the S&P 500 to the 2100 level, and then possibly even higher than that. At this point in time, we believe that pullbacks offer call buying opportunities as the bullish momentum should continue.
S&P 500
The EUR/USD pair continued to rally a bit during the session on Monday, and if we can break above the recent highs, we feel that this market will more than likely head to the 1.12 level where will face quite a bit of bearish pressure. If it does break out to the upside, we are perfectly comfortable in waiting for a resistive candle near the aforementioned 1.12 level to start buying puts again. We don’t really have a scenario in which we want to start buying calls at this point in time.
Gold markets finally broke out above the $1220 level on Monday, signaling a fresh leg higher. With that we are definitely buying calls on short-term pullbacks, as the market should continue to go much higher, probably heading to the $1260 level next, and then the $1300 level after that. We have no interest in buying puts at this point in time as the breakout in our opinion is fairly significant.