Originally posted by R.Cox. For the full trading briefing click here
The S&P 500 closed higher for the 6th consecutive week, as budget agreements in the US and Eurozone were taken alongside another week of better than expected corporate earnings releases. The combination of these factors helped propel positive sentiment (even with markets at elevated levels) but with limited macro data and a slow earnings calendar next week these markets are now vulnerable for a downside correction as investors start to take profits at these higher levels.
The EUR/GBP saw a massive drop last week and longer term this is expected to continue as the fundamental picture has not matched with the technical picture in recent months. At this stage, its just a matter of deciding on price levels and with last week’s top at 0.87, we can look for weekly PUT options in the EUR/GBP at 0.8520.
With little in the way of fundamental drivers for stocks next week, I expect some profit taking in the S&P 500 and the current elevated levels look good for weekly PUT options at 1520
. Earnings reports are mostly second-tier so we would need to see significant surprises to run higher here near term.