The Tuesday session could be a fairly quiet one as we don’t see a whole lot in the way of economic announcement. However, we think that a couple of the themes that we’ve seen recently should continue. For example, the EUR/USD pair showed a bit of trouble at the 1.25 level, and with that we believe that the market will ultimately sell off every time it rallies with that being the case, we are looking to buy puts every time we get close to that level, as we believe that the Euro is essentially toxic.
We think that the gold markets are very interesting all of a sudden as we initially had fallen during the day, but then shot straight higher and broke out above the 1200 level. At this point time we think that calls can be bought in the gold market based upon strength, but we think that the market will probably struggle to get above the 1250 level. With that, we are short-term bullish but still believe that the downtrend is in full effect.
The DAX pull back slightly, but we believe that there is a significant amount of support at the 6600 level, and as a result we are looking for supportive candles closer to that level in order to start buying again. At that point time we would be call buyers as the market should in fact continue to grind higher and head closer to the 6900 level given enough time.
We believe ultimately that the S&P 500 is in very similar shape as the DAX, as we did have some negativity during the session on Monday, but quite frankly we feel that the “floor” in this market is down at the 2000 handle. With that, we feel that any supportive candle between now and then will be a call buying opportunity but we are cognizant of the fact that the nonfarm payroll numbers come out on Friday, meaning that it could be a fairly quiet and timid week until then.
