Wall Street recovered to end mostly higher Thursday after a choppy session had Wall Street veering between the debt crisis in Greece and U.S. economic data that offered some respite. Stock trimmed their decline before the start of the regular trading session after jobless claims fell more than expected and housing starts also beat estimates, helping rein in anxiety about the economy. The Dow Jones Industrial Average gained 64.25 points to 11,961.52, a level that leaves it 0.5% higher than last Friday’s close. The Standard & Poor’s 500 Index climbed 2.22 points to end at 1,267.64, while the Nasdaq Composite Index fell 7.76 points to 2,623.70.
We had better than expected housing sales and unemployment claims, although still above 400,000. Nothing too dramatic today as we await quadruple witching tomorrow. We’re at a critical juncture where today’s action could either make it or break it for the bull case. If the S&P 500 close below 1250, it’s possible we may have another 100 pts underneath over the course of the next few weeks. The question is whether the markets will be able to recover from such action before today’s close.
Heading into the weekend, after a few days of liquidation on Greece’s account, we would doubt many small speculators would want to be long. The Euro firmed up on the day, but the Greek debt situation is not going away anytime soon and the last thing we want is another slide back towards parity, although it’s difficult to imagine any other outcome given the lack of confidence behind restructuring their debt. Now being compared to Lehman Brother’s, the psychological ramification would be to sell and go away.
Today’s Important Economic Announcements (GMT)
9:00 AM EUR Trade Balance
12:30 PM CAD Wholesale Sales m/m
1:55 PM USD Prelim UoM Consumer Sentiment
Crude Oil
On the energy front, Crude oil futures edged lower in electronic trading Friday, weighed by a stronger dollar and uncertainty surrounding the European debt crisis and slowing global growth. Crude shed 17 cents to $94.79 a barrel on the New York Mercantile Exchange during Asian trading hours. Oil will be going off the board early next week, so we may see rollover action in conjunction with today’s witching to continue yesterdays slide. IEA raised its medium term oil price forecast based on increased demand in the 3rd quarter, but given the technical indicators you would have to fade the news. We have yet to hit our expected price of $92.90.
Stop Loss: 95.75
Take Profit: 92.90
GBP/USD
The pair finished the session lower following the release of worse than expected UK Retail Sales. In addition to that, it was the combination of risk-averse investor sentiment on the back of persistent concern over the Eurozone, together with a stronger USD which depressed appetite for the currency. Going forward, there are no UK related macro-economic data releases on Friday and as such the price action will remain a by-product of risk on/off investor perception of news coming out of the Eurozone and more importantly the periphery. Set your target at 1.6043 with a relatively close stop-loss.
Stop Loss: 1.6165
Take Profit: 1.6043
USD/JPY
USD/JPY opened the Asian trade at 80.65, dipped to session lows below 80.50, and has since bounced from this zone to recover nearly all its losses. The bearish bias is still in play, however. The dollar’s retreat from yesterday’s NY high of 80.94 lends credence to our daily consolidative view that further choppy trading below Wednesday’s 81.08 top would continue, and as long as said NY resistance holds, downside bias remains. At the time of writing, USD/JPY is trading in the 80.62 zone. Don’t be surprised if we move back up to 80.90.
Stop Loss: 80.47
Take Profit: 80.89
Published by www.SolidityBrokers.com
