Looking at the Tuesday session, it’s quite likely that the market will continue the same themes that we have seen for some time. In other words, the US dollar will continue to be the favored currency around the world. With that being the case, the gold markets will continue to go much lower, probably heading down to the $1140 level. We are buyers of puts every time this market rallies, and most certainly would continue to buy puts if we break down below the $1170 level as well.
gold
The EUR/USD pair continues to try to rally from time to time, but ultimately it continue to fail every time it makes that attempt. With that, we are put buyers, and we believe that the US dollar will continue to strengthen and push this market down to the 1.2050 level given enough time. The Euro is far too toxic to own at this point, so quite frankly we continue to buy puts in that market as well.
The S&P 500 continues to find support, as we fell to the 2080 level, but found enough support to turn things back around. With that, we believe that a break above will facilitate a move above the 2100 level. Above that area we believe that the longer-term trend continues and we should see the call buying opportunities offer themselves up every time the market pulls back.
Remember though, the liquidity will be an issue over the next couple of sessions, so we would suspect that the best trades to be taken will be of the very short-term nature. However, we believe that ultimately the longer-term trend will continue once we get into the higher liquidity parts of January as well.