Trading recap Monday 1st of August

See the full trading log here


Risk off again and what a reversal in the S&P500 futures after the gap open!!!
It was a more or less one way trading after the gap higher following the news out of the US that Washington had finally reached an agreement on debt bill to avoid a US default. I guess it was more or less expected and the focus shifted to the weak US ISM Manufacturing PMI that came in much lower than expected at 50.9 vs the 55 expected. We had a range of 34.50 points yesterday and the volume picked up 2.6m contracts traded in the S&P500 Emini futures.
We now have support at 1261.75, 1257 and key support at 1252.25 (June low).
Resistance at 1291 and 1304.75.
Given the size of the recent move I think we will see a bounce higher Tuesday.

Crude was all over the place yesterday, but to keep it simple it failed at 98.60 and broke below the key support at 94.65, which opens for a move toward the key support at 90.

Closed the Euro 1,42 puts for 1650 USD profit. Made several adjustments on the ES and Crude oil. The focus shifts to the downside in the Crude, so will look for a move down to 90 now, meaning I will sell puts and trade short in the Crude oil futures.

Good luck

update trading log 12 CET Monday 1st of August

Hi,
I have updated the trading log with the latest trades done this morning.
Bot ES at 1300
Bot Crude (CL) at 96.95
Bot back the 2x Euro 1,42 puts for 30 pips, profit = 1650 USD

full trading log here

Trading recap Friday 29th of July

see full trading log here

Wow, what a day, big swings in both directions and lots of news.
It is amazing how the politicians are once again able to mess things up. Instead of getting things done in time, they wait to the last minutes and play their games, so actually things fall out of hand. Seems like they like the drama and attention that they just cannot miss that by doing things uncomplicated.
It is not strange the approval rating of Obama is at an all time low.
http://www.businessinsider.com/barack-obamas-approval-rating-just-hit-an-all-time-low-2011-7

Back to the markets. We gapped lower by 13 point at the open in the S&P 500 futures, but we saw a solid reversal after breaking below 1280 support to a low of 1278,50.
Buyers stepped in and we saw a rally to 1300,75. One thing I like to point out, we often see reversals when the daily bar reaches more than 500k contracts traded in the S&P500 Emini futures (ES) and the 2nd hourly bar of the day had 580k traded contracts. We should now have potential for a bounce up to 1311 or so at least at the start of next week. All the short calls for expiration today expired out of the money and I kept the premium received, very nice!!!!

I did buy EURCHF as we are at the bottom of the playing field and should see support down here. Another point is that the CHF has outperformed vs ES, see chart below and there is a clear disconnect, something has to give. My bet is that CHF is overvalued at this point and should drift back towards 1.20 where we have the 55 day exponential moving average. Another point is that I am short ES at the moment with the negative delta, meaning it also serves as a hedge trade.

Added a small VIX trade, sold 20 Aug puts and bot 22,50 Sep puts. My thinking is that VIX will drift back below 20 in a few weeks, meaning that we want to be around 20 level when it expires 16th of August. Then the 22,50 would be in solid profit.

Closed the gold futures and sold some more puts and only short 1550 puts, will keep that bias unless we break below 1580.

Also sold October 600 puts in the Corn (ZC) contract at 11 per contractm meaning break even is 589. That means we have to break that key low of 602 to lose money. Good volume down there, so expect that to hold well.

Have a nice weekend

Trading recap Thursday 28th of July

See full trading log here

Another weak session by S&P500 futures and it could not hold above 1311 resistance and closed once again at the very low end of the daily range.
Volume was at 1,9m contracts in the S&P500 emini futures (ES), which is much higher than we have seen on recent up bars. So there is clearly some serious selling going on in the S&P. Today's down bar also confirms the wide down day on very high volume yesterday as selling. The reason for that is if it had been buying in yesterday's bar, today should have been up.

Chart image of S&P 500 emini below:

Trading wise it was more selling of calls for expiration tomorrow, both in the 1310 strike and 1300 strike. As I mentioned yesterday, the next stop is for a test of 1290 I reckon. US deficit deal is the major focus of the markets now. Time for the people in Washington to get moving, only 101 hours left to default.

I bought some EURCHF (1 lot) at 1,1494, because the CHF looks very expensive here and I think we will be back at 1,18 fairly soon as the US debt plan is passed.
This should also send Gold lower, key support in gold at 1580 at the moment.

I closed the crude structure for a loss of 3650 and opened a new one, strangle ratio position where I sold 5 x Sep 95 puts and sold 3 x Sep 99 calls.
Reason was that 101 strike is getting a bit far away from current price 97 and it is rangebounde. This structure leaves me with a slightly bullish bias and we need to see some decent directional moves before I lose money. The zig zag up and down the recent range has been dificult to trade, so wanted to get out of that situation.

Good Luck

Trading recap Wednesday 27th of July

See full trading log here

Nothing but down for the S&P 500 futures and it closed the day down 26.75 points. VIX spiked through the key 22 resistance level and Crude broke lower through the 97.50 key support (recent range low).
All risk off basically.
Trading wise I kept on selling ES calls throughout the day and trading mostly S&P500 Emini futures. I was expecting lower prices when it gapped below the key level of 1325 and I was looking for move to at least 1315 and possibly 1311. But not 1299, wow the people that were buying on dips just got whacked as the rebounds were mostly just 1 to 2 points. The high volume and strong sell off into the close signals we have more to come.
I also did some adjustments in Crude, but the volatility has dropped in the short calls at 99.50 and 101 strikes that I have on. Will probably change the structure in the next few sessions.

I also added a bearish bet on the JPY, bought December put in the futures options and it corresponds to basically buying 79,36 calls for 234 pips. Will likely add something more to this spread as we go, but at the moment the volatility is rather low at 10%, so not too keen to sell too much until that at least go above 13%

Good luck

Market report 28th of July

See full pdf version here

Follow our live trades for free at: http://twitter.com/AFtrading

Markets are now looking at a downgrade of the US and evaluating the impact. Risk off was the big theme yesterday as the market is getting nervous about a possible US default as we still have no solution on the US deficit plan. What will happen if indeed a deficit plan is not agreed upon by the 2nd of August deadline? A week back everybody seemed to be taking for granted that a plan would be reached and we were testing the upper end of the recent range in the S&P500 futures at 1343. One week later we are at the opposite side of the table, testing the lower end of the last weeks’ range. This has pretty much been the story the last few months, swinging rapidly between hope and disaster. I just reiterate the comments I have made many times over the last months, the debt crisis will be with us for a long time, there is no quick fix. Even though we might solve the problem today, we are likely to have more problems down the road as countries like Greece, Portugal, Ireland and possibly more have to restructure their debt down the road as they cannot get funded in the regular market. It seems like the next on the list of failed states will be Cyprus, where the government resigned and seems like they need a bailout in the next weeks. Of course Cyprus is such a small state that the market impact will be very little I reckon.
S&P500 futures took a big hit and closing down by 26.75 points yesterday. The fact that we closed at the very lows on high volume indicates that we had a lot of selling yesterday and I think we go lower and at least test the 1290 now and a big risk that we will break even lower. Yesterday’s move lower confirms that we had another failure in the 1340 to 1362 resistance zone. That also indicates that we are likely to have more work to do on the downside. I mentioned last week that I was a bit concerned for more potential upside because of the lack of volume on the approach towards that 1340 to 1362 resistance zone. I said we need increasing volume on the up bars to be able to push through the resistance. In an up move, declining volume is bearish, in down move, is declining volume bullish.

Euro back down below 1.43 today after trading up to 1.4536 high yesterday. Aussie continues to do well as the market is looking for a possible rate hike in the RBA meeting next week, following high inflation data this week. I don’t think RBA will hike rates next week, but rather wait a bit. However it seems pretty certain the next move will be up and that is enough to support AUD as most other G-10 counterparts are not doing much on the interest rate side for the foreseeable future. That upside idea in NZD that I mentioned last week going into the RBNZ meeting worked out rather well as we have moved about 164 pips higher since I publish the idea on the 19th of July.

Crude broke below that 98.50 support yesterday following the DOE data, confirming a likely reversal lower. Indeed a bit later in the day, we took out the 97.50 support as well. That means the interim rising support from the June lows have now been broken. Next target to the down side is now 94.74, which is a key support level.

VIX broke above that key 22 resistance level and closing at 22.85, +2.62 points. That is a new 1 month high and also interim down trend from the March high is broken, which opens for a move to 25 level and higher. I view this is another confirmation that we are likely to continue the risk off mode.
My comment on the VIX from Tuesday: “Looking at the VIX index chart, we have a clear range last 3 months and it has worked very well to buy below 15.50 and sell towards 22. I still favor buying dips and I think we will see another spike towards 25 to 30 in the next 4 to 6 weeks. See chart below.”

However, I will keep a close eye on the news ticker as positive news out of US deficit negotiations can swing things around rather quickly. Especially given that we probably have quite a bit of shorts in the S&P 500 futures following yesterday’s heavy selling, meaning a short squeeze could make a rally even stronger.

Today’s calendar:
14.30 US initial jobless claims
16.00 US pending home sales
00.45 NZ building consents
01.01 UK GfK survey
01.15 Japan Manufacturing PMI
01.30 Japan CPI, unemployment
01.50 Japan industrial production

Looking at a few interesting points in the markets trading wise:
- S&P500 futures, I am looking for a test of 1290 support and likely break lower, following strong selling yesterday and another failure up in that 1340 to 1362.
- Corn bouncing higher after reaching my downside 670 target. Also hearing some traders buying bunch of puts for December with 500 strikes as cheap downside protection. I expect the upside to be limited for now and bearish below 696.
- Crude false break higher earlier in the week and breaking lower yesterday, looking for a test of 94.74
- Yen continues to be strong across the board no matter what the equity markets are doing, seems like the correlation between equities and JPY is out of the window for the time being. I still have a bias that JPY should sell off, but at the moment not happening. I think we could see BoJ on the bid if it goes towards 77, so keep an eye on that. The best way to play potential JPY I reckon is to buy some calls, I see that 9th Sep at the money options are only at 10.07% volatility. That looks interesting in my opinion as I think the volatility will rise from that level.
- Comment from earlier this week, spot on: GBPUSD has broken the recent downtrend and looking for a test of the key resistance at 1.6444 next, as long as 1.62 holds.


Technical’s and comments

Euro: Could not really get up to the 1.4577 resistance and stopped short at 1.4536 yesterday and back down below 1.43 at the time of writing (1.4290). Very choppy price action as the two currencies compete for the “least wanted spot among G-10”. Next key support is 1.4140.

Cable: It tested my upside target of 1.6440 to the pip basically reaching a high of 1.6440. Still bullish potential above 1.62 support holds.

USDJPY: JPY is performing strongly no matter what the equity markets are doing at the moment and no sell off of the JPY to really spot at the moment. I still think

JPY is very overvalued, but maybe not so much against EUR and USD. Alternative plays are AUD, CAD and NOK I think.

Swissy: Big down trend in this pair and no telling when it will end. My guess is that we will not seen any major reversal until the Fed starts tightening monetary policy. Risk off mode again this morning benefitting CHF and trading down to 0.7992 low so far. Minor resistance at 0.8092 that can be used to sell. Otherwise difficult to outline any levels other than the 0.80 as a key level in the current price region.

AUDUSD: Up and away, trading higher on CPI data yesterday and testing the 1.11 resistance, reaching high of 1.1080. Buy on dips for now, but would like to see a test of 1.08 before going long.

USDCAD: CAD performing strongly on the prospects of rising rates in Canada. However it has moved a fair deal to the downside and at this point I would like to see a pullback before looking to buy CAD.

S&P Future (ES): Big volume sell off yesterday, closing on the lows = bearish and I expect the bounces to be short lived until we have a solution on the US deficit negotiations. I mentioned last week and this week that a another failure in that 1340-1362 region should send us much lower. Next support is 1290.
Gold: 1628 high so far, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that. Looks like buy on dips above 1580 for now. The big risk is if we get a debt ceiling deal in the US, could see strong profit taking.

Crude oil: False break above 100 level followed by a break down through the recent support at 97.50=bearish. Looking for a move lower towards 94.74 key support. Minor support at 96.96 and resistance at 98.98

________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading recap Tuesday 26th of July

See full trading log here

The S&P 500 futures failed to make any recovery above the 1335 resistance level and closed in the lower end of the range on slighly increasing volume compared to previous session. Volume was 1.406m contracts traded in the S&P 500 Emini futures, fairly low volume I would say.
See chart below:

What's next? Below 1335 the bias is down. I see this 1325 support as a key level near term and basically above 1325 there is still recovery potential, below 1325 we target 1315, which has been a pivot level over the last months. Minor resistance is at 1335 now.
The feelling is that we will drift lower to 1315, but things can change very quickly in this market, so probably best to just follow the technicals.

Trading wise I sold more 1330 calls for expiration on Friday (29 Jul), so total short of 7 contracts now. Reason for selling these is that I have expect prices to drift down and since I have short a bunch of calls and long 6x futures, I actually wanted to be more negative delta as we go lower.

On the crude side I bought futures, looking for a move higher, but that once again stopped short of 101 and fell back late in the sessions as the API inventory data showed a larger than expected build.
Crude is trading inside this 97.50 to 101.70 range and contiunes to making false break outs and returns back into the range. Tricky to trade at the moment. I still think the upside is somewhat limited near term due to the release of the strategic oil reserves, but longer term demand looks decent, so I don't expect and big move down. I expect the 90 level to hold for quite some time. Crude daily chart below:

Good luck

Market report 26th of July

Daily Market Report for Tuesday 26th of July 2011

see full pdf version here

Follow our live trades for free at: http://twitter.com/AFtrading

Still no solution on the US deficit talks and this is keeping the pressure on S&P 500 futures and we continues to see safe heaven flows into gold, CHF and JPY. The main focus is definitely on the US deficit talks and I would not be surprised to see a reversal of the last days movement if such an agreement it reached. The recent delays by Washington seem to be a political game and my feeling is that the markets still assume everything will work out in the end. So I see the biggest risk is for sure a no solution outcome. I see this as quite unlikely. However the US deficit problem will not go away overnight and the market might look for more problems down the line, which might make the rally short-lived.
S&P 500 futures have a gap open at 1344.25 and key resistance at 1352.75 and 1361.75. I think it will be very important technically what happens this week. We have failed in this region (1340 to 1362) three times already this year. We want to see increasing volume towards the key levels to be able to push through. An approach on decline volume is bearish in an up move and bullish in a down move.
Euro has broken through the falling resistance at 1.4462 and next key resistance is 1.4578, the July high. We have minor resistance at 1.4520. Looks like the market prefers to sell USD for now, at least until any US deficit plan has been agreed upon. EURGBP is also helping Euro higher at the moment, which week UK data putting a bid into the EUR.
Aussie higher on less than expected comments from the RBA Governor and more talk about players adding AUD to their reserves is certainly supportive as well. We do have key CPI data out overnight at 03:30 CET, which is a major event risk. Market consensus is 0.7% and any upside surprise will have people looking for a rate hike at the August 2nd meeting. Biggest potential in price movement I reckon is a lower than expected reading.
Crude is looking interesting as we are trapped inside the 97.50 to 100.20 and we need to see a daily close outside of this range to get something directional going. Next big levels are 104 to the upside and 94.76 support.
Today’s calendar:
16.00 US S&P/CaseShiller home price index
16.00 US new home sales
16.00 US consumer confidence
03.00 NZ busines confidence
03.30 Aussie CPI




Looking at the VIX index chart, we have a clear range last 3 months and it has worked very well to buy below 15.50 and sell towards 22. I still favor buying dips and I think we will see another spike towards 25 to 30 in the next 4 to 6 weeks. See chart below.

Looking at a few interesting points in the markets trading wise:
- Next key resistance levels in the S&P 500 Emini futures are 1344.25 gap from 8/7 and the 7/7 high at 1352.75. We failed at 1352 last up run and we really need to see increased volume and a break higher this time. Another failure would be very bearish in my view.
- Corn bouncing higher after the test of the 670 target. Also hearing some traders buying bunch of puts for December with 500 strikes as cheap downside protection. I expect the upside to be limited for now.
- Crude key levels for a break out are 100.20 and 97.50, but we have seen plenty of false breaks, so might be sensible to wait until we close outside of this range before we get really excited about a break out?
- Yen continues to be strong across the board no matter what the equity markets are doing, seems like the correlation between equities and JPY is out of the window for the time being. I still have a bias that JPY should sell off, but at the moment not happening. I think we could see BoJ on the bid it goes towards 77, so keep an eye on that. The best way to play potential JPY I reckon is to buy some calls, I see that 9th Sep at the money options are only at 10.07% volatility. That looks interesting in my opinion as I think the volatility will rise from that level.
- GBPUSD has broken the recent downtrend and looking for a test of the key resistance at 1.6444 next, as long as 1.62 holds.

Interesting articles:
Obama Warns U.S. Debt Threatens ‘Serious’ Damage - Bloomberg -
http://www.bloomberg.com/news/2011-07-26/obama-urges-compromise-as-debt-may-cause-serious-damage-to-u-s-economy.html

Obama Warns of Default Risk - The WSJ -
http://online.wsj.com/article/SB10001424053111903999904576468012930792134.html?mod=WSJEUROPE_hps_MIDDLETopNews

Greece Says It’s Working With IMF, Hasn’t Requested for More Financial Aid - Bloomberg -
http://www.bloomberg.com/news/2011-07-26/greece-says-it-s-working-with-imf-hasn-t-requested-for-more-financial-aid.html
US parties no closer to debt deal as default fears grow - The Telegraph -
http://www.telegraph.co.uk/finance/financialcrisis/8660880/US-parties-no-closer-to-debt-deal-as-default-fears-grow.html
Eurozone bonds 'creep' upwards over bailout uncertainty - The Telegraph -
http://www.telegraph.co.uk/finance/financialcrisis/8659207/Eurozone-bonds-creep-upwards-over-bailout-uncertainty.html
Europe Rates Resume Climb - The WSJ -
http://online.wsj.com/article/SB10001424053111904772304576468263801544734.html?mod=WSJEurope_hpp_LEFTTopStories
Business as Usual For Bond Markets? - The WSJ-
http://online.wsj.com/article/SB10001424053111903591104576467840104475006.html?mod=WSJEurope_hpp_LEFTTopStories
U.S. Debt Negotiators Should Look to Britain - The WSJ -
http://online.wsj.com/article/SB10001424053111903999904576467943082839426.html?mod=WSJEUROPE_hps_MIDDLESixthNews
Swiss Franc Gives Shelter in Storm - The WSJ -
http://online.wsj.com/article/SB10001424053111904772304576468370366953928.html?mod=WSJEUROPE_hps_sections_markets
Irish Finance Minister Is Right to Cheer, But Banks Continue to Struggle - The WSJ -
http://blogs.wsj.com/source/2011/07/25/irish-finance-minister-is-right-to-cheer-but-banks-continue-to-struggle/
Greece needs a new political culture - The FT -
http://www.ft.com/intl/cms/s/0/12eed040-b6f0-11e0-a8b8-00144feabdc0.html#axzz1T4MyiD1P
How to move beyond a short-term fix - The FT -
http://www.ft.com/intl/cms/s/0/11b94aac-b6f0-11e0-a8b8-00144feabdc0.html#axzz1T4MyiD1P
No money left to boost growth, says PM - The Times -
http://www.thetimes.co.uk/tto/business/economics/article3105071.ece
Obama ready to go to the wire in showdown over debt - The Times -
http://www.thetimes.co.uk/tto/business/economics/article3105129.ece
Aussie Joining Reserve Currencies as Central Bankers Seek Commodity Havens - Bloomberg -
http://www.bloomberg.com/news/2011-07-25/aussie-joining-reserve-currencies-as-central-bankers-seek-commodity-havens.html


Technical’s and comments

Euro: Break above 1.4462 falling resistance and next key resistance is July high at 1.4578. We have minor resistance at 1.4520
Cable: Next big resistance level is 1.64, followed by 1.6441. The interim falling resistance has now been taken out and buy on dips is my favorite as long as 1.62 support holds.
USDJPY: JPY is performing strongly no matter what the equity markets are doing at the moment and no sell off of the JPY to really spot at the moment. I still think JPY is very overvalued, but maybe not so much against EUR and USD. Alternative plays are AUD, CAD and NOK I think.
Swissy: Big down trend in this pair and no telling when it will end. My guess is that we will not seen any major reversal until the Fed starts tightening monetary policy. Risk off mode again this morning benefitting CHF and trading down to 0.8025 low so far. Minor resistance at 0.8092 that can be used to sell. Otherwise difficult to outline any levels other than the 0.80 as a key level in the current price region.
AUDUSD: Above 1.09 and 1.10 is the next resistance level now. CPI data out in Asian session can be a major market mover.
USDCAD: CAD performing strongly on the prospects of rising rates in Canada. However it has moved a fair deal to the downside and at this point I would like to see a pullback before looking to buy CAD.
S&P Future (ES): Tested the upper end of the recent range end of last week. Key resistance levels are 1344.25 and 1352.75. The volume on the approach is a bit low, but still better than the last few times we have failed in this area. Still a bit worrying in regards to potential upside. If we fail in this region once more I think we have a deeper down leg coming up.
Gold: 1620 high so far, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that. Looks like buy on dips above 1580 for now. The big risk is if we get a debt ceiling deal in the US, could see strong profit taking.
Crude oil: Struggling to get above 100 level. I thought we would see a clean break higher if 99.50 was taken out. Another failure up in the 99.50 to 100 resistance zone would be big trouble for bulls I think. Need to hold key support at 97.50 today to avoid a move lower.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading recap Monday 25th of July

See the full trading log here

Lower open in the S&P500 futures following the inability to reach an agreement on US deficit plan, but recovered a bit during the session to close at 1333, 7.5 points lower than Friday's close. We did however hold the key support at 1325, which is key support for now. Closing below 1335 is bearish in my opinion and I see risk for a move back down to 1317 support this week.

Made only one trade, sold 2x1335 29 Jul calls in the S&P500 futures.
My feeling is that we will go lower in the S&P500 until any agreement on the US deficit is reached.

Good luck

Trading recap Friday 22th of July

Ended the week up 2,15% and now in total up 17,97% over 7 weeks.
See the full trading log here

The S&P 500 Emini futures (ES) was not able to close the gap at 1344.25, but recovered from early weakness to close at 1334. The 1327 level that was a prior resistance level is now support going forward. In general it looks heavy towards 1350 for the moment and volume is not really at the level I want to see it to break higher. Will be very interesting to see what happens next, I think we are at a very key level right here and I reckon we could see a pretty large move in either direction. The near term trigger levels are 1345 to the upside and 1326 to the downside. The on the next frame we have 1352 and 1317. The big range is 1252 to 1361.
I have attached the chart below in the ES

Trading wise I closed the long Corn futures early in the session and the total gain for the Corn structure turned out to be 1700 USD, pretty good.

Looking at ES, the 22 July strikes expired today and I bought back all except the 1330 calls that were exercised into shorts at 1330. Since I have bought ES on the way up the sells at 1330 were netted against open longs.
I am net long 6 ES futures. I also sold some 1345 calls for expiration next Friday as I saw that the 1345 could not be taken hike. Made sense to sell some calls in the upper end of the range in case we drop back down.

I also sold some 1550 puts in the Sep Gold (GC)for 10 per contract.
Good Luck

Market report 25th of July

See the full pdf version here

Follow our live trades for free at: http://twitter.com/AFtrading

The inability to reach a debt ceiling agreement in the US before the weekend is weighing on risk this morning and gold made a new record high at 1620.84. S&P 500 futures are down 10.75 points (-0.75%) in Globex at the time of writing. The Swiss franc is outperforming big time and down below 1.16 again. In general, the well known correlations in risk off mode moving as expected this morning. The longer the US politicians use to get to an agreement the more nervous the market will get. Last week my feeling was the market was pricing in a solution in the US. I still think they will reach a conclusion, but the longer it takes the higher the risk is for an ugly scenario. My thinking is that Euro zone is far from saved. Since Greece cannot go to market and lend, they have to come back for more support at some stage. You also have potential debt problems in Span and Italy along with already support Ireland and Portugal. It becomes harder for Germany to accept these bail outs every time they happen, how many more can they take? Or do they actually have any other option?
The economic calendar this week is fairly light in the Euro zone. We have GDP from US and UK this week and inflation data from Australia (CPI Wednesday). The Reserve Bank of New Zealand meets on Thursday.
The S&P 500 future was not able to close the 1344.25 gap Friday and I think it will be very important technically what happens this week. We have failed in this region (1340 to 1362) three times already this year. We want to see increasing volume towards the key levels to be able to push through. An approach on decline volume is bearish in an up move and bullish in a down move.
EURUSD is trapped in debt literally, with problems on both sides of the Atlantic. Difficult to really point out a winner between EUR vs. USD in the short and medium term. However I think it becomes more and more clear that the debt problems will remain for a very long time. Euro traded up to 1.4444 high Friday. I am looking for a test of the falling resistance at 1.4467 on the up move, but maybe we saw the high Friday? If we break below the 1.43 support, I will give up the bullish bias.
Aussie failed to break that 1.0880 key resistance as expected on the first attempt. I am a bit careful up here as we are on the top of the recent range and I am unclear if it is wise to chase prices higher up here.
Today’s calendar:
14.30 US Chicago national activity index
00.45 NZ trade balance
Looking at a few interesting points in the markets trading wise:
- Next key resistance levels in the S&P 500 Emini futures are 1344.25 gap from 8/7 and the 7/7 high at 1352.75. We failed at 1352 last up run and we really need to see increased volume and a break higher this time. Another failure would be very bearish in my view.
- Corn bouncing higher after the test of the 670 target. Also hearing some traders buying bunch of puts for December with 500 strikes as cheap downside protection. I expect the upside to be limited for now.
- Crude still struggling to break above the 100 level and seems to be plenty of sellers above 100.
- Yen continues to be strong across the board no matter what the equity markets are doing, seems like the correlation between equities and JPY is out of the window for the time being. I still have a bias that JPY should sell off, but at the moment not happening. I think we could see BoJ on the bid it goes towards 77, so keep an eye on that. The best way to play potential JPY I reckon is to buy some calls, I see that 9th Sep at the money options are only at 9,84% volatility. That looks interesting in my opinion as I think the volatility will rise from that level.
- GBPUSD has broken the recent downtrend and looking for a test of the key resistance at 1.6444 next, as long as 1.62 holds.

Interesting articles:
China's growth 'unsustainable', say analysts - The Australian -
http://www.theaustralian.com.au/business/economics/chinas-growth-unsustainable-say-analysts/story-e6frg926-1226100929751

Cable appeals for new dose of easing - The FT -
http://www.ft.com/intl/cms/s/0/f7a00fc4-b5fb-11e0-8bed-00144feabdc0.html#axzz1T4MyiD1P

Spain Will Require Regions to Curb Deficits, Its Finance Minister Says - The WSJ -
http://online.wsj.com/article/SB10001424053111903591104576466192518918406.html?mod=WSJEUROPE_hps_LEFTTopWhatNews

El-Erian Says U.S. Vulnerable to Debt-Rating Downgrade, May Avoid Default - Bloomberg -
http://www.bloomberg.com/news/2011-07-24/u-s-vulnerable-to-downgrade-el-erian.html

A Proposal to Impose a Federal Revenue Ceiling - The WSJ -
http://blogs.wsj.com/washwire/2011/07/24/a-proposal-to-impose-a-federal-revenue-ceiling/?mod=WSJ_latestheadlines

A Summer of Rest, Not Rise, for Euro - The WSJ -
http://online.wsj.com/article/SB10001424053111903461104576461672647745588.html?mod=WSJEUROPE_hps_LEFTTopWhatNews

Wall Street Set to Act on Default, But How? - The WSJ -
http://online.wsj.com/article/SB10001424053111904772304576466373207538638.html?mod=WSJEurope_hpp_LEFTTopStories
Europe's ideologues took the whole world to the brink of disaster - The Telegraph -
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8658334/Europes-ideologues-took-the-whole-world-to-the-brink-of-disaster.html
Avoiding default is the easy part for America. It's mapping out the economic future that's hard - The Telegraph -
http://blogs.telegraph.co.uk/finance/richardblackden/100011034/avoiding-default-is-the-easy-part-for-america-its-mapping-out-the-economic-future-thats-hard/
Tim Geithner joins warnings of market meltdown as deal goes to the wire - The Telegraph -
http://www.telegraph.co.uk/finance/financialcrisis/8658500/Tim-Geithner-joins-warnings-of-market-meltdown-as-deal-goes-to-the-wire.html
Angela Merkel faces revolt in Germany over rescue deal - The Telegraph -
http://www.telegraph.co.uk/finance/financialcrisis/8658331/Angela-Merkel-faces-revolt-in-Germany-over-rescue-deal.html
Bank of Spain to Take Over CAM - The WSJ -
http://online.wsj.com/article/SB10001424053111904233404576462403813062690.html?mod=WSJEUROPE_hps_LEFTTopWhatNews
Euro Rally Isn't Convincing - The WSJ -
http://online.wsj.com/article/SB10001424053111903591104576465793120246506.html?mod=WSJEUROPE_hps_LEFTTopWhatNews
Why Euro May Keep Defying Gravity - The WSJ -
http://online.wsj.com/article/SB10001424053111904233404576462470995976308.html?mod=WSJEUROPE_hps_sections_markets
Greek Deal Facilitates Worsening Relations - The WSJ -
http://online.wsj.com/article/SB10001424053111903591104576465782128982822.html
Washington is drowning America - The FT -
http://www.ft.com/intl/cms/s/0/d27ba852-b619-11e0-8bed-00144feabdc0.html#axzz1T4MyiD1P
The eurozone crisis is on pause, not over - By Wolfgang Münchau - The FT -
http://www.ft.com/intl/cms/s/0/d2818128-b619-11e0-8bed-00144feabdc0.html#axzz1T4MyiD1P

Reid Working on Backup Plan to Lift Ceiling, Cut Spending - The WSJ -
http://online.wsj.com/article/SB10001424053111903591104576466502257302660.html?mod=WSJEurope_hpp_LEFTTopStories

Bernanke, Geithner, Dudley Are Said to Meet on Debt Limit - Bloomberg -
http://www.bloomberg.com/news/2011-07-22/geithner-said-to-meet-bernanke-dudley-to-discuss-consuquences-of-default.html

Republicans Back Short-Term Debt-Limit Agreement, Risking Veto From Obama - Bloomberg -
http://www.bloomberg.com/news/2011-07-22/obama-says-republicans-walking-away-from-fair-deal-in-debt-ceiling-talks.html






Technical’s and comments

Euro: Broke above 1.43, which opens for a test of 1.4472 (falling resistance from the May high). Support is former resistance at 1.43 now.
Cable: Next big resistance level is 1.64, followed by 1.6441. The interim falling resistance has now been taken out and buy on dips is my favorite as long as 1.62 support holds.
USDJPY: JPY is performing strongly no matter what the equity markets are doing at the moment and no sell off of the JPY to really spot at the moment. I still think JPY is very overvalued, but maybe not so much against EUR and USD. Alternative plays are AUD, CAD and NOK I think.
Swissy: Big down trend in this pair and no telling when it will end. My guess is that we will not seen any major reversal until the Fed starts tightening monetary policy. Risk off mode again this morning benefitting CHF and trading down to 0.8025 low so far. Minor resistance at 0.8092 that can be used to sell. Otherwise difficult to outline any levels other than the 0.80 as a key level in the current price region.
AUDUSD: Strong resistance up at 1.0880 that Aussie failed to overcome on the first test of this level Friday, as I mentioned in Friday’s report was a likely scenario. Would like to see a dip towards 1.07 before looking long now.
USDCAD: CAD performing strongly on the prospects of rising rates in Canada. However it has moved a fair deal to the downside and at this point I would like to see a pullback before looking to buy CAD.
S&P Future (ES): Tested the upper end of the recent range end of last week. Key resistance levels are 1344.25 and 1352.75. The volume on the approach is a bit low, but still better than the last few times we have failed in this area. Still a bit worrying in regards to potential upside. If we fail in this region once more I think we have a deeper down leg coming up.
Gold: 1620 high so far, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that. Looks like buy on dips above 1580 for now. The big risk is if we get a debt ceiling deal in the US, could see strong profit taking.
Crude oil: Struggling to get above 100 level. I thought we would see a clean break higher if 99.50 was taken out. Another failure up in the 99.50 to 100 resistance zone would be big trouble for bulls I think. Need to hold key support at 98.50 today to avoid a move lower.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Market report 22nd of July

Tragic day for Norway today. My thoughts go out to the victims and relatives of the Oslo bombing and the massacre at “Utøya”. RIP
The markets liked the Euro zone summit agreement and risk was bid all yesterday. I think we are not passed the problems though, as we still have potential crisis down the road with Italy and Spain. Lets face it Greece will not be able to access the credit markets and at some point the debt probably have to be restructured. But for now it looks to be in the background. The US deficit plan is another major thing we need to get out of the way. More delays there can potentially see the market get nervous…
We still have some key resistance levels in the S&P500 futures that needs to be taken out to really celebrate, because we have failed in this region (1340 to 1362) three times already this year. The approach this time is looking a bit better with volume picking up on the up days as we move into the 1340-1362 resistance zone. Last time we tested this area the volume actually declined as we moved higher. We want to see increasing volume towards the key levels to be able to push through. An approach on decline volume is bearish in an up move and bullish in a down move.
Euro traded up to 1.4444 high earlier this morning, but since fallen back a bit to 1.4368. I we looking for a test of the falling resistance at 1.4472 on the up move, but maybe we saw the high this morning?
Following a set of good numbers from Canada recently, it looks like we will see a rate hike from Bank of Canada later this year. I think December is the most likely month. This is certainly supportive for CAD and if we can get a Crude rally as well, it could see CAD outperform G-10 in 2nd half of the year.
Aussie has not able to break above the key resistance at 1.0880. That could be though to knock out on the first attempt.
US 10 Year Treasury futures not able to hold below 124 level and back up to 124’10 at the time of writing with 2 hours to go of the Friday session.
Looking at a few interesting points in the markets trading wise:
- Next key resistance levels in the S&P 500 Emini futures are 1344.25 gap from 8/7 and the 7/7 high at 1352.75. We failed at 1352 last up run and we really need to see increased volume and a break higher this time. Another failure would be very bearish in my view.
- Corn bouncing higher after the test of the 670 target. Also hearing some traders buying bunch of puts for December with 500 strikes as cheap downside protection.
- Crude broke above the 99.50 key resistance and I was think it would fly, but so far it just it up to 100.06. Will we fail in this 99.40 to 100 zone again?
- Yen is just not moving to the upside, very surprised to see Yen performing this well given the recent rise in risk appetite, looks interesting to try and go long below 79 in USDJPY for a move back to 80.50 next weeks. Might actually be better to buy some calls, I see that 9th Sep at the money options are only at 10,06% volatility. That looks interesting in my opinion as I think the volatility will rise from that level.
- GBPUSD has broken the recent downtrend and looking for a test of the key resistance at 1.6444 next.


Technical’s and comments

Euro: Broke above 1.43, which opens for a test of 1.4472 (falling resistance from the May high). Support is former resistance at 1.43 now.
Cable: Next big resistance level is 1.64, followed by 1.6441. The interim falling resistance has now been taken out and buy on dips is my favorite as long as 1.62 support holds.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 78.44 to 81.78. I favor going long below the 79 level for a move back to 80.50 or higher.
Swissy: I am not looking to chase this pair lower at this stage. To me it looks actually more interesting to look at buying some calls. Will update on twitter if I do anything.
AUDUSD: Amazing the 1.0550 support level once again holds. Strong resistance up at 1.0750.
USDCAD: I prefer selling rallies below 0.98 for a move back to 0.9500. My 0.9500 target hit following the BOC statement. I would not chase the price lower at this level, but rather wait for an retracement to get short again. The yearly low is at 0.9446. Minor resistance at 0.9540 today that can be used as a level to sell at.
S&P Future (ES): Moving up and testing the upper end of the recent range. Next key resistance levels are 1344.25 and 1352.75. The volume on the approach is a bit low, but still better than the last few times we have failed in this area. Still a bit worrying in regards to potential upside. Are we looking at a case of buy the rumor and sell the fact?
Gold: 1610 high so far, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that. Watch out if we break below 1580 support, could see sell stops go off.
Crude oil: The break of 99.50 was only good for 56 cents so far today and I am a bit surprised it didn’t get more power into the up move. I thought we would see a clean break higher if 99.50 was taken out. Another failure up in the 99.50 to 100 resistance zone would be big trouble for bull I think. Need to hold key support at 98.50 today to avoid a move lower.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading recap Thursday 21th of June

See the updated trading log here

More up action in the S&P 500 futures and we came within striking distance of filling the gap at 1344.25, high today was 1343.50.
The no supply bar from Wednesday was also confirmed with the wide up bar on increased volume yesterday = bullish
The increased voluyme is key if we are going to break above the 1352.75 July high.
We need a strong approach and blast above that level to contiune the rally. If we would have another failure in this area (1340 to 1365)it would be very bearish in my view.

See chart below of S&P 500 Emini Sep Futures (ES):

Trading wise it was all about buying ES as I had to hedge the short calls when the S&P was surging. Bought in total 15 contracts during the day and I am net long 13 contracts now. I have a bunch of weekly options expiring on Friday. Short Calls: 5x1325 and 3x1330. Short Puts 4x1295.
The puts will expire worthless, unless we have a total collapse Friday, which is less likely.
I will most likley buy back the short calls that expires today early in the session as the time value left is very little, since we are quite some way about the strikes. No point risking that a drop lower would make the time value rise considerably and maybe have to trade against the strikes. To put it this way, risk to reward keeping them to expiration is very high.

I closed the short 4x 760 Sep calls in corn for 9 1/2 per contract, making 2200 USD on the position ex commissions. My target of 669 was more or less reached as we hit low of 670. I still have one long futures open in the Corn complex.


In crude I was looking for more upside when it broke 99,50 key resistance, but only trading up to 100,06. Seems like there is still plenty of selling towards 100. Have to be careful now and keep and eye on the downside as there is a risk for stops going through if we break 98.50 support. I also sold one more 101 Sep calls for 2.36 as it failed to break higher.

Good luck

Market report 21st of July

Risk appetite is rising further today as the stock market is flying high. It seems like there will be a solution to the Greek debt problem and US might also be moving closer to an agreement on the deficit plan. It looks like the market is currently pricing in that everything will work out ok, so maybe not that much additional upside when we actually reach agreements on those issues. However the market remains a news driven market and any form of disappointment or bad news can swing the market in the total opposite direction rather quickly, so be careful and use stops.
S&500 Emini futures have traded up to 1343.50 high so far today with about 2 hours to go n the session. Currently at 1340, up 18,75 points or 1,42%.
Euro traded up to 1,4402 high earlier, but since fallen back a bit to 1,4372. Since we have taken out 1,43 resistance, I think we will see a move higher to test the falling resistance (from May high through July high) at 1,4476 next.
Aussies really enjoys the risk on mode and is trading above 1.08 now, we have key resistance at 1.0880 that could be though to knock out on the first attempt.
US 10 Year Treasury is below 124 level, right in line with my comments last previous days.
Since I am running a bit late on the report today, I will jump right to the interesting levels section.
Looking at a few interesting points in the markets trading wise:
- Next key resistance levels in the S&P 500 Emini futures are 1344.25 gap from 8/7 and the 7/7 high at 1352.75. We failed at 1352 last up run and we really need to see increased volume and a break higher this time. Another failure would be very bearish in my view.
- Corn made a low of 670 ¾ today and reached my downside target, I also closed the 4x short 760 September calls for 2200 USD profit (ex commission)
- Crude broke above the 99.50 key resistance and I was think it would fly, but so far it just it up to 100.06. Will we fail in this 99.40 to 100 zone again?
- From last few days, spot on: “Selling the US 10 year Treasury above 125 should work well as I expect the yield to rise again when the US debt plan goes through. Should at least see a move back below 124 near term.” Trading 123’31 now.
- Yen is just not moving to the upside, very surprised to see Yen performing this well given the recent rise in risk appetite, looks interesting to try and go long below 79 in USDJPY for a move back to 80.50

Technical’s and comments

Euro: Broke above 1.43, which opens for a test of 1.4476 (falling resistance from the May high). Support is former resistance at 1.43 now.
Cable: After it broke 1.62 resistance it has been one way traffic today and has kept pace with the Euro rally. Next big resistance level is 1.64, followed by 1.6441. The interim falling resistance has now been taken out and buy on dips is my favorite as long as 1.62 support holds.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 78.44 to 81.78. I favor going long below the 79 level for a move back to 80.50 or higher.
Swissy: I am not looking to chase this pair lower at this stage. To me it looks actually more interesting to look at buying some calls. Will update on twitter if I do anything.
AUDUSD: Amazing the 1.0550 support level once again holds. Strong resistance up at 1.0750.
USDCAD: I prefer selling rallies below 0.98 for a move back to 0.9500. My 0.9500 target hit following the BOC statement. I would not chase the price lower at this level, but rather wait for an retracement to get short again. The yearly low is at 0.9446. Minor resistance at 0.9540 today that can be used as a level to sell at.
S&P Future (ES): Moving up and testing the upper end of the recent range. Next key resistance levels are 1344.25 and 1352.75. The volume on the approach is a bit low and that worries me a bit in regards to potential upside. Are we looking at a case of buy the rumor and sell the fact?
Gold: 1606 high yesterday, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that. Watch out if we break below 1580 support, could see sell stops go off.
Crude oil: The break of 99.50 was only good for 56 cents so far today and I am a bit surprised it didn’t get more power into the up move. I thought we would see a clean break higher if 99.50 was taken out. Another failure up in the 99.50 to 100 resistance zone would be big trouble for bull I think.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading recap Wednesday 20th of June

The trading log has been updated.
click here to see the log

S&P 500 futures could not hold onto the early gains, but volume was very low and looks like a possible no supply bar = bullish.
No supply bar is a narrow bar, closing on the lows with volume less than previous two sessions and preferable as low relative volume as possible compared to recent weeks.
This signals that the smart money is positioned for an upmove already and not participating in the selling, therefore the narrow bar and low volume.
If this is correct we should see a wide up bar in the next few sessions and increading volume.

Crude oil chart

Just a quite note on Crude oil:

The EIA expects the US and world wide consumption of Crude to rise in 2011 and 2012.
See link here

However I am trading the market and these projections is good knowledge to have, but the price action is always king.

Looking at the chart we see that it is trading within a 94.65 to 99.87 last week.
These are the trigger levels for the next move. The August contract expires today.

Market report 20th of July

See the full pdf version here

Follow our live trades for free at: http://twitter.com/AFtrading
Make sure to check out our blog as well: http://avantagefinancial.blogspot.com/

Risk appetite rising over the last two sessions and S&P 500 futures are up 4 points in Globex at 1325.25, following strong earnings from Apple last night. Nasdaq 100 Emini futures are outperforming and up 0.70% at 2405.75 on the back of the Apple earnings. If trading intraday in equity indices, it makes sense to buy Nasdaq 100 futures on dips rather than Dow Jones or S&P 500 as I expect the Nasdaq 100 futures to outperform following the Apple earnings.
More on the Apple earnings can be found in the link below:
http://www.bloomberg.com/news/2011-07-20/apple-shares-jump-after-record-iphone-ipad-sales-fuel-profit.html
The Euro is more or less flat at the moment, trading 1.4182 in the spot market. I am not sure what to expect out of the EU summit tomorrow. However, it seems like the market is pricing in that a solution will be reached. I am not so convinced it will be that easy, therefore I still prefer to sell rallies below 1.4300 at the moment. However as we have seen the last few weeks, these event risks can play out both ways and I see it pretty high risk to play Euro going into the EU summit as we can see quite a bit of noise. Maybe a better idea is to wait and see the outcome of the summit or at least play with small positions.
The deficit reduction plan from the “Gang of Six/Seven” seems to be on the right direction, although the details of the plan remain unclear. The main point to take from this is that it looks like Republicans and Democrats can agree if it really matters and it looks like a agreement will be made within the 2nd of August deadline. Although “the more realistic deadline” set by Obama is only two days away now. The key issue is how the rating agencies will view this plan.
Minutes from the last Bank of England meeting on 6-7 July, showed BoE voted 7-2 to keep UK rates on hold and looks like rates will remain low for some time. I have seen some comments over the last days that the phone-hacking scandal in the UK could force the coalition government to fall, leading to general election. This could again have impact on the austerity plans, which would be negative for the GBP. This sounds a bit extreme to me, but who knows…
http://www.bloomberg.com/news/2011-07-20/boe-voted-to-keep-rate-steady-as-dale-weale-sought-quarter-point-increase.html
I repeat a comment from yesterday’s report, as NZD continues to strengthen, high of 0.8566 so far today:
“I see a trader friend of mine in London looking for upside in the NZD as we have the RBNZ rate announcement next week. The market is looking for 50bps hike by January, but some are looking for a move already next week. More likely is a signal that rates will be raised on the next meeting, which is in September. There are only 4 more RBNZ meetings until January (including next week’s meeting), so if the market is correct we should see some rate hike signals soon. I was also reminded by my friend that RBNZ was more hawkish than expected at the last meeting (June). “
Canadian dollar is stronger across the board following the Bank of Canada left rates unchanged yesterday, but signaled that borrowing costs will rise as the economy recovers.
http://www.bloomberg.com/news/2011-07-19/bank-of-canada-says-policy-interest-rate-will-rise-dropping-eventually-.html
I also repeat my comment from yesterday on Gold: “Just one thought on the Gold rally. We have seen a major move higher from the 1478 low (August futures) on the 1st of July, to the high of 1607 today. The move higher has been on the scare that we might see a US default and basically a run for safe heaven. So, if we see an agreement on the US debt ceiling, gold should trade lower and the risk is for sell stops to go off if it drops below 1580 or so I reckon.”
Looking at a few interesting points in the markets trading wise:
- S&P 500 Emini futures broke above the 1315.50 level (the Friday’s high) and the next key level last week’ s high at 1327.75. We then have gaps at 1329.50 and 1344.25.
- Looking for a move back lower in Corn to fill the gap at 669. Chart can be seen here: http://chart.ly/5y9bfyv
- Crude broke above 97.74 minor resistance, looking for a test of the 99.50 key resistance next, where we saw solid selling last week.
- Selling the US 10 year Treasury above 125 should work well as I expect the yield to rise again when the US debt plan goes through. Should at least see a move back below 124 near term.
- Surprised to see Yen performing this well given the recent rise in risk appetite, looks interesting to try and go long below 79 in USDJPY for a move back to 80.50

Today’s calendar (Central European Time):
16.00 US Existing home sales
16.30 Bank of Canada monetary policy report
16.30 DOE Crude oil inventories

Technical’s and comments

Euro: Euro looks weak below the 100 day moving average at 1.4293. I prefer selling rallies for a move down to the 200 day moving average at 1.3913 near term.
Cable: EURGBP lower, helping GBP higher and we have key resistance at 1.6194 (14/7 high) that should be though to run through unless the Euro really blasts higher, which I think is unlikely going into the EU summit Thursday.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 78.44 to 81.78. I favor going long below the 79 level for a move back to 80.50 or higher.
Swissy: I am not looking to chase this pair lower at this stage. To me it looks actually more interesting to look at buying some calls. Will update on twitter if I do anything.
AUDUSD: Amazing the 1.0550 support level once again holds. Strong resistance up at 1.0750.
USDCAD: I prefer selling rallies below 0.98 for a move back to 0.9500. My 0.9500 target hit following the BOC statement. I would not chase the price lower at this level, but rather wait for an retracement to get short again. The yearly low is at 0.9446. Minor resistance at 0.9540 today that can be used as a level to sell at.
S&P Future (ES): Key level at 1293.75 held and buyers stepped in. Looks like higher is the most likely near term direction. Key resistance at 1315.50 that needs to be taken out to open for a move to test last week’s high at 1327.75. We also have a gaps up at 1329.50 and 1344.25. Support at 1291.25 (yesterday’s low) and we also have 61.80% Fibonacci retracement of the 1252 – 1352 move coming at 1290.
Gold: 1606 high yesterday, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that. Watch out if we break below 1580 support, could see sell stops go off.
Crude oil: Broke above the 97.74 minor resistance yesterday and now looks like we will test the 99.50 key resistance, where we saw lots of selling last week. A break above 99.50 will likely see buys stops triggered and we could easily pop 1 point or more higher. So make sure to use stops if short.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading recap Tuesday 19th of July

The trading log has been updated, please click here to see

I am now up 16% in 6 weeks, not bad.

Made 2 trades intra day, long ES and long Corn for 212,50 USD profit.
I also sold some 1295 puts exp Friday 22 July, early on in the session. Then I added 2X short 1320 calls for Aug and 2x 1320 calls for 22 July. I also hedged these calls by buying ES at 1319, 1322.50 and 1324.

The S&P 500 futures moved higher as I expect following the successful test of 1293.75 key support yesterday. It gapped higher on the open by 8.25 points and broke above the Friday high of 1315.50, extending to a high of 1324.25.
What is next? We have a resistance up at 1327.75, which is last week's high.
Then we have gaps at 1329.50 and 1344.25.
To the downside we have support at yesterday's high of 1308, actually open gap as well, followed by the low at 1291.25.

Crude broke above the 97.74 resistance level and my short bias is a bit dangerous now. I am in fact not much short though as the delta on my Crude structure is on short 0,3 contract at the moment. Ref Crude at 98.30

Corn had a wild session. It gapped higher 23.25 points and basically just traded lower for the rest of the session, ending up only 3 1/2 points at 699 3/4. Given the volume also increase this price action is quite bearish in my view. I am still looking for the gap fill at 669, meaning a down move. See chart below

Good Luck

Market report 19th of July

See the full pdf version here

Follow our live trades for free at: http://twitter.com/AFtrading
Make sure to check out our blog as well: http://avantagefinancial.blogspot.com/
I outlined that 1293.75 level as key in yesterday’s report and in fact we had a successful test of that level yesterday, which put a bid into the market towards the close and overnight. The S&P 500 Emini futures (ES) gapped higher at the open today by 8.25 points and traded to a high of 1316.25 so far. The high from Friday is at 1315.50 in the ES and acting as major resistance at the moment and it is natural to see sellers coming in at that level. However a daily close above 1316 today in the ES could open for a stronger rally. News wise it is more of the same really, the European debt crisis and US debt ceiling talks are the major focal points. The EU summit on Thursday is probably the next big event on the calendar. Also watch out for any developments in US debt ceiling talks. It seems like everybody expects an agreement to be reached on the US debt ceiling, but time is running out quick and Obama said it had to be done this week.
The Euro is higher so far today, but I still reckon it is a sell on rallies below 1.4300 for the moment. RBA minutes out overnight were less hawkish than expected as the RBA dropped their view that policy would need to be tightened at some point. However I think it is the risk on/off mode that is the major driver for AUD, meaning the equity markets will dictate the direction. At least until we see interest rates going up in the US or RBA start cutting rates of course.
I see a trader friend of mine in London looking for upside in the NZD as we have the RBNZ rate announcement next week. The market is looking for 50bps hike by January, but some are looking for a move already next week. More likely is a signal that rates will be raised on the next meeting, which is in September. There are only 4 more RBNZ meetings until January (including next week’s meeting), so if the market is correct we should see some rate hike signals soon. I was also reminded by my friend that RBNZ was more hawkish than expected at the last meeting (June).
Canadian dollar is stronger across the board following the Bank of Canada left rates unchanged today, but signaled that borrowing costs will rise as the economy recovers.
http://www.bloomberg.com/news/2011-07-19/bank-of-canada-says-policy-interest-rate-will-rise-dropping-eventually-.html
Just one thought on the Gold rally. We have seen a major move higher from the 1478 low (August futures) on the 1st of July, to the high of 1607 today. The move higher has been on the scare that we might see a US default and basically a run for safe heaven. So, if we see an agreement on the US debt ceiling, gold should trade lower and the risk is for sell stops to go off if it drops below 1580 or so I reckon.
Looking at a few interesting points in the markets trading wise:
- Successful test of the key 1293.75 level in the S&P 500 futures yesterday and the close well off the lows signals buying interest. We have key resistance at 1315.50 now, the Friday high.
- Looking for a move back lower in Corn to fill the gap at 669. Chart can be seen here: http://chart.ly/5y9bfyv
- Crude has key support at 94.50 and key resistance at 97.74, watch those levels for the next directional move.
- Looks attractive to sell US 10 year Treasury futures above 125, will update on Twitter if I open any positions.


Technical’s and comments

Euro: Euro looks weak below the 100 day moving average at 1.4293. I prefer selling rallies for a move down to the 200 day moving average at 1.3913 near term.
Cable: EURGBP lower, helping GBP higher and we have key resistance at 1.6194 (14/7 high) that should be though to run through unless the Euro really blasts higher, which I think is unlikely going into the EU summit Thursday.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 78.44 to 81.78.
Swissy: I am not looking to chase this pair lower at this stage. To me it looks actually more interesting to look at buying some calls. Will update on twitter if I do anything.
AUDUSD: Amazing the 1.0550 support level once again holds. Strong resistance up at 1.0750.
USDCAD: I prefer selling rallies below 0.98 for a move back to 0.9500. My 0.9500 target hit following the BOC statement. I would not chase the price lower at this level, but rather wait for an retracement to get short again.
S&P Future (ES): Key level at 1293.75 held and buyers stepped in. Looks like higher is the most likely near term direction. Key resistance at 1315.50 that needs to be taken out to open for a move to test last week’s high at 1327.75. We also have a gaps up at 1329.50 and 1344.25. Support at 1291.25 (yesterday’s low) and we also have 61.80% Fibonacci retracement of the 1252 – 1352 move coming at 1290.
Gold: 1606 high so far, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that.
Crude oil: Looks like plenty of selling towards 99.50 last week and I expect a move down to test the key support at 94.50 near term. Minor resistance at 97.74 and a close above this level would make me more uncertain about a down move to be honest.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading recap Monday 18th of July

See the full trading log here

I did close the 6x short ES (S&P 500 Emini futures) position that I had from Friday at 1307.25 in the Globex session. I was quite heavy short in the ES following the Friday's excersise of the 1300 calls and give that I plenty of short calls it made sense to get a bit more delta neutral. I did one long trade in the ES at 1293.75 for 1.25 points gain. That was it for today.

That being said the ES did go down and test the 1293.75 key level that was the break out level on the run higher from 1252 to 1352 move. That break out level held yesterday, ok the low 1291.25, but that I count as a false break as we closed well above the 1293.75 key support. Technically it is bullish above this 1291.25 level for Tuesday I reckon. We have Friday's high at 1315.50 as the key resistance now.

See chart below

I will look to add to the ES structure Tuesday, most likely by selling short term puts to hedge the short calls at 1340.

I still look for a move lower in Corn and Crude looks heavy below 97.80.

Good Luck

Market Report 18th of July

see full version here:http://avantagefinancial.ch/images_up/avantagefinancial.ch/pdfs/daily18jul11.pdf


The European stress test has been analyzed over the weekend and the verdict seems to be that risk off modus is back. Italian vs. German bonds widens to 320 bps. USD is stronger this morning, gold at record highs and equities down. S&P 500 futures gap lower on the open and is down by 19 points or 1.4% as the time of writing (about 1 hour and 50 minutes into the session). It seems like market players are very short term in their trading views at the moment and more playing news as we continue to swing up and down the 1250 – 1350 range. No real directional conviction to spot and the volume in the S&P 500 emini futures (ES) have also been rather low recently. One thing I would like to point out is that the rally to make new highs clearly failed at 1352, which is actually quite negative in price action terms and makes me think we could see a rather aggressive down leg next below the 1250 support. For a break lower to materialize we need to see increasing volume on the down bars as we head lower and preferably the close to be at the very low or lower end of the daily ranges. This clearly indicates sellers taking over. We have a key support level in the S&P 500 emini futures (ES) at 1293.75, which was the former break out level. A daily close below 1293.75 is certainly bearish and opens for a test of 1250 support.
See S&P 500 Emini futures (ES) daily chart below:

Gold is making record high, trading 1606 in the spot at the moment. It seems that Gold is tracking US 10 year Treasury pretty tight over the last weeks, which makes sense. The risk for gold is clearly if we get higher rates in the US in my opinion. That might take some time though as the latest economic data have been far from good. More money printing is also of course bullish for gold and seems to be the major factor behind the latest rally.

The Euro is lower across the board as it seems the market see little positive for the Euro in the near term at least. EURCHF below 1.15 level, very rich in my opinion, but I am not looking to put on any position yet. EURGBP is back below 0.88 and we have the Bank of England minutes out on Wednesday, which is quite open in my opinion. Seen comments from Ernst and Young ITEM club that they are looking for rate hikes around November, but they did cut their 2011 UK growth forecast. See article below:
http://www.telegraph.co.uk/finance/economics/8643256/Interest-rates-to-rise-in-November-as-recovery-strengthens.html

Today’s calendar (CET):
12.00 Bundesbank monthly report
14.30 Canada motor vehicle sales
15.00 US TICS data
16.00 US NAHB housing market index
03.30 RBA Minutes

Looking at a few interesting points in the markets trading wise:
- Key level in the S&P 500 emini futures at 1293.75 that will decide the next directional move in my opinion.
- Looking for a move back lower in Corn to fill the gap at 669. Chart can be seen here: http://chart.ly/5y9bfyv
- Crude has key support at 94.50 and key resistance at 97.74, watch those levels for the next directional move.
- Looks attractive to sell US 10 year Treasury futures above 125, will update on Twitter if I open any positions.


Technical’s and comments

Euro: Euro looks weak below the 100 day moving average at 1.4293. I prefer selling rallies for a move down to the 200 day moving average at 1.3913 near term.
Cable: Sell on rallies towards 1.61 is my favored strategy today. I expect the 1.5900 support to hold, so possibly down there as well should work.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 78.44 to 81.78.
Swissy: I am not looking to chase this pair lower at this stage. To me it looks actually more interesting to look at buying some calls. Will update on twitter if I do anything.
AUDUSD: Risk off and we are down towards the 1.0550 level again(, which has worked well as a long entry in the past, worth another try if we see 1.0550?
USDCAD: I prefer selling rallies below 0.98 for a move back to 0.9500.
S&P Future (ES): Key level at 1293.75, which is the former break out level of the move 1252 to 1352. We also have 61.80% Fibonacci retracement of the 1252 – 1352 move coming at 1290. Key resistance today is Friday’s high at 1315.50.
Gold: 1606 high so far, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that.
Crude oil: Looks like plenty of selling towards 99.50 last week and I expect a move down to test the key support at 94.50 near term. Minor resistance at 97.74.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading Recap Friday 15 Jul

Please see the updated trading log here for full list of today's trades.

We had a bounce of expirations in the S&P 500 emini (ES) options today and basically it left us with 6 positions short at 1300. I will sell some puts against these futures on Monday, so see twitter for live update on that.

I also did one adjustment to the Crude oil and added 2 more short 101 Sep calls for 1,91.
One new trade as well, sold 4X 760 Sep calls in Corn, looking at the chart the recent bull run really looks overdone. The supply of Corn still loooks good and even though the weather outlook have been a bit bearish last week, it still does not warrant this latest bull run in my opinion. The reason for picking 760 as the strike is that it we have a series of resistance around 730 to 764 and it gives me a break even of 780, which means it has to make a new yearly high to lose money. Another point is that the option is trading above 42% volatility, which is in the upper end of the range. I am looking for a move back down to fill the gap at 669 in the near term.
See daily Corn chart below:

Trading recap Thursday 7th of July

ECB out of the way and they decided to raise rates by 25 bps and ECB have suspended collateral rules for Portugal until further notice.
http://www.ft.com/intl/cms/s/0/a7743bec-a87c-11e0-8a97-00144feabdc0.html

It seems like the ECB is desperately kicking the debt crisis further down the road, which at this point seem logical. But at some point the real problem have to be dealt with.
Trading wise I closed out the Euro options structure that I put on yesterday for 300 USD profit.
Did further adjustment in the S&P structure after the S&P just pushed right through another resistance level at 1340.25. Actually it gapped above it on the open and never looked back. Next key resistance is the yearly high at 1361 now. My problem with this rally is that it is going up a bit too quick to be healthy and suspect we are getting a correction in the next few sessions. Another reason for my thinking of a correction lower before new highs is the fact that the volume on the last few sessions have been falling. This is certainly not a good sign for a break out. To take out a major resistance level you want to see increasing volume to punch through the prior top. Of course nothing is guaranteed here, so one had to be careful.

In crude I sold Aug 100 calls for expiration 15 July and I bought 1x mini futures at 98.50. There has been a nice bounce from 90 level up to 99.40 high today following the Crude oil inventories. We are now well back into the old range from 96 to 104 that we saw from start of May to mid June. I think we see a correction back towards the 96.50 level next, there for I put on the options position. If we break higher I will contiune to hedge the delta. So it leaves me with a bit more flexbility and given that we have only 1 week left until expiration, the time value is dropping off fast.

Full trading log here

Good luck

Market Report Thu 7th of July

See full version here with links

Bank of England just held interest rates at 0.5% to aid the economic recovery and they held its bond-purchase program at 200bln pounds. This was in line with market expectations. http://www.bloomberg.com/news/2011-07-06/king-diverges-further-from-europe-as-boe-set-to-maintain-record-low-rate.html
ECB interest rate announcement is the major event today and the market expectation is for a 25 bps increase to 1.50%. We just saw The Portuguese bond yields widened to 17.8% yesterday and the CDS market has upped the chances for sovereign default across the board basically. I expect to see a decent move following the ECB press conference today. I think the largest potential move in the Euro will be if Trichet is more dovish than anticipated in the press conference at 14:30.This will flatten the interest rate path and hit the Euro. If Trichet is more hawkish, I expect to see a short squeeze higher. However the latest scenario is less likely, given the recent news on the European debt crisis. Trichet is not expected to use the strong vigilance word today. If he does it would indicate a rate hike next month as well, which I see very unlikely.
Short dated option volatility is up in the Euro ahead of the ECB and NFP payrolls and overnight is trading at 21%, up 2% from yesterday and 1 week is at 13.3%, up 1% from yesterday.
We had a mixed equity market in Asia, with Shanghai down 0.58% and the S&P 500 futures are trading above the 1340.25 key resistance in Globex. I think a daily close above 1340.25 level in the S&P 500 emini futures would open for a test of the yearly high at 1361.
We have both US ADP employment data and US initial jobless claims out today, which can both move the market substantially and shape expectations for tomorrow’s US nonfarm payrolls. So keep an
I still think CHF looks rich and I favor going long below 1.2050 for a move back to 1.2250.
I am still looking to add some type of position in Corn following the huge sell off week, but I have not made up my mind what the position will be yet. I will come back on that during the next few sessions.
I will keep an eye on the US debt ceiling talks going forward, some talk of a possible of a new Homeland Investment Act that would allow repatriation of overseas earnings at a lower tax rate. This happened last in 2005, which saw the USD strengthen by about 15% vs. Euro and 20% vs. Yen. This make it interesting to look at the Yen, which has been range bound for a few months, with high at 81.78 and low of 79.70. I am longer term bearish on the Yen and I think we could see a break out higher in the next week or so. A trigger could be a strong than expected NFP report. See chart next page.

Today’s calendar (CET):
13.45 ECB rate announcement
14.15 US ADP employment data
14.30 ECB/Trichet press conference
14.30 US initial claims
16:30 DOE Crude oil inventory
18:30 Feds Hoenig speaks in Oklahoma
Looking at a few interesting points in the markets trading wise:
- A daily close in the S&P 500 futures above the high from 31st of May at 1340.25 would open for a test of the yearly high at 1361. Break out level of 1317 is now key support.
- Crude punching through the 96.00 resistance yesterday, next key level is 98.35.
- Silver bouncing off the lower end of the last month’s range of 32.75 to 38.76. Can we head back up towards the upper end of the range?
- Gold got up to 1534 and I now expect it to trade back down to at least 1520 support.
- 100 day moving average coming in at 1.4256 in the Euro today, so expect bids ahead of that. Watch out for noise during the ECB press conference.

Interesting news stories:
Exclusive: Treasury secretly weighs options to avert default - Reuter -
http://www.reuters.com/article/2011/07/07/us-usa-debt-exclusive-idUSTRE7660GE20110707
Movement in Budget Impasse - The WSJ -
http://online.wsj.com/article/SB10001424052702304793504576430301748287970.html?KEYWORDS=Movement+in+Budget+Impasse
The Only Reform That Will Restrain Spending - The WSJ -
http://online.wsj.com/article/SB10001424052702304760604576428273248743348.html?KEYWORDS=demint
How the private sector could rescue Greece - The Telegraph -
http://www.telegraph.co.uk/finance/economics/gilts/8621006/How-the-private-sector-could-rescue-Greece.html
Europe declares war on rating agencies - The Telegraph -
http://www.telegraph.co.uk/finance/economics/8621520/Europe-declares-war-on-rating-agencies.html
US will enter second recession if debt limit is not raised, warns President Barack Obama - the Telegraph -
http://www.telegraph.co.uk/finance/financialcrisis/8621582/US-will-enter-second-recession-if-debt-limit-is-not-raised-warns-President-Barack-Obama.html
Germany Revisits Greek Debt Plan - The WSJ -
http://online.wsj.com/article/SB10001424052702303544604576429754231439240.html?mod=WSJEUROPE_hps_LEFTTopWhatNews
Moody's: Stress Tests Set to Fail 26 Banks - The WSJ -
http://online.wsj.com/article/SB10001424052702303544604576429713440829554.html?mod=WSJEUROPE_hps_LEFTTopWhatNews
What to Expect From Trichet’s Press Conference - the WSJ -
http://blogs.wsj.com/economics/2011/07/06/what-to-expect-from-trichets-press-conference/
‘Good Ship Dollarpop’ Is About to Sail Again - the WSJ -
http://blogs.wsj.com/source/2011/07/06/good-ship-dollarpop-is-about-to-sail-again/?mod=WSJBlog&mod=thesource
Basel on wrong path to tackle systemic risk - The FT -
http://www.ft.com/intl/cms/s/0/d063596c-a268-11e0-9760-00144feabdc0.html#axzz1RNAE222R
Inflation fears spark rate rise in China - The FT -
http://www.ft.com/intl/cms/s/0/d077fe34-a7be-11e0-a312-00144feabdc0.html#axzz1RNAE222R
Investors overreact to the blindingly obvious - The FT -
http://www.ft.com/intl/cms/s/0/70a3e368-a801-11e0-afc2-00144feabdc0.html#axzz1RNAE222R
Downgrade blow knocks wind out of Portugal - The FT -
http://www.ft.com/intl/cms/s/0/90ef90b4-a800-11e0-afc2-00144feabdc0.html#axzz1RNAE222R
Doubts over banks’ role in Greek bailout - the Times -
http://www.thetimes.co.uk/tto/business/economics/article3085717.ece
China May Limit Rates on ’Controllable’ Inflation - Bloomberg -
http://www.bloomberg.com/news/2011-07-06/china-may-pause-after-third-rate-move-as-wen-bets-inflation-controllable-.html


Technical’s and comments

Euro: We are back below 1.4350 after the Portugal downgrade yesterday. The resistance levels today are the low from 7th of June at 1.4564 and the high from the same day at 1.4695. We have a series of support levels from 1.4320 down to 1.4237.
Cable: Sell on rallies towards 1.61 is my favored strategy today. I expect the 1.5900 support to hold, so possibly down there as well should work.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 79.70 to 81.78.
Swissy: Have resistance at 0.85 at the moment, which is the pivot level in this pair for now I think. Bearish below this level and bullish above.
AUDUSD: Stronger than expected Aussie Jobs data overnight supporting the AUD. We have strong resistance around the 1.0770 level, so would not chase the price action above that level. The buy in level of 1.0550 or so is the place I would look to try long again.
USDCAD: Rapid move lower and I think it makes sense to wait for a rally back up towards 0.9730 or to get short again.
S&P Future (ES): Key level at 1340.25 and a daily close above here would open for a test of the yearly high at 1361. Key support is now Friday’s break out level of 1317.
Gold: Hit the extended upside target of 1530 yesterday and now I expect a correction back to at least 1520 support.
Crude oil: Took out the 96 key resistance yesterday and this 96 level held on the test lower this morning. That is bullish confirmation for me and looks like we will test next key resistance at 98.35 next, followed by 100.39. Key support is now down at 96. If we break below 96, the risk is for stop loss festival will send it lower.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.