Originally posted by R.Cox. For the full trading breifing click here
Stock Markets Drift Lower as Fiscal Cliff Skepticism Continues
Equity markets were range bound for most of the week as counterbalancing events kept investors from establishing large, market-moving positions. On the positive side were the manufacturing data releases out of the US and China along with the next injection of Quantitative Easing stimulus enacted by the Federal Reserve. But the fact that we were not able to see any meaningful pushes higher in stock markets is a clear indication that investors are skeptical with respect to the potential outcome for the US Fiscal Cliff negotiations.
My Trading Recommendations in 50 words
1.Last week’s gold trade was not filled, as market volatility continues to slow but I will open another order for weekly CALLS into 1680
on the dual argument that safe haven assets will benefit from any prolonged Fiscal Cliff Skepticism and from any Dollar weakness encouraged by Federal Reserve bond purchases. Gold
will be one of the primary beneficiaries if the Fiscal Cliff outcome turns negative, so upside potential far outweighs downside risk.
2. The USD/JPY
has not seen much in the way of pullbacks recently but with prices still well below my year end target of 85, I will be looking to buy weekly CALLS on a move back to 83.20
. Remain watchful of the outcome in Japan’s parliamentary elections and the next BoJ meeting, as the Yen is likely to trade off of official comments and policy statements, rather than near term economic data.