Originally posted by R.Cox. For the full trading briefing click here
Stocks traded sideways for the most part this week, with the S&P 500 showing signs of stalling after a 6-week rally, and the Euro Stoxx 600 closing unchanged after two weeks of losses. In Europe, positive earnings from PSA Peugeot Citroen, Barclays, Heineken and ABB Limited were offset by weaker economic data, and the Euro Stoxx 600 managed to stabilize after falling nearly 1% in the previous two weeks. Most of the previously negative movements were triggered by political uncertainties in Spain and Italy and this was bringing volatility to bond yields in both of those countries. Nonetheless, the longer term trend has been bullish, with the Stoxx 600 still showing gains of 2.7% year-to-date.
With the German releases next week, we should see some volatility in the Euro and anything above 1.3420 is a weekly sell. If we see the EUR/USD reach 1.3420 I will enter into weekly PUT options
as the near term picture looks weak on both a technical and fundamental basis, and a test of the 61.8% Fib looks imminent.
For stocks, I will be looking for a one month CALL option Starbucks (SBUX) at 56
. The company’s recent sales and earnings per share releases were strong and the consumer discretionary stocks could outperform other sectors if we start to see some continued stalling in the S&P as a whole.