Looking at the Thursday session, the European CPI number will certainly become the focus in the beginning of the session, as the EUR/USD pair has been the epicenter of most of the action. The EUR/USD pair broke out to the upside during the day on Wednesday, but failed at the 1.29 level. We ended up going back below the 1.28 level, which of course was massively resistive previously. The shape of the candle is a shooting star, and therefore we like buying puts in the EUR/USD pair, especially if the European CPI numbers come out fairly soft.
The gold markets broke above the $1240 level, which was significantly resistive recently. However, as the markets closed during the session, we will have to pay attention to what Wednesday in the producing, whether or not we get above the $1240 level on a daily close. If we do get that, we think that the gold markets will more than likely head to the $1280 level, offering call buying opportunities. On the other hand, if we drop below the $1240 level, it’s very likely that we sit still.
The S&P 500 fell hard during the session on Wednesday as well, as a result it looks as if the market is going to continue to go much lower in the short-term. We look at short-term bounces as put buying opportunities on short-term expiry options.
The DAX looks very soft at this point in time, and as a result we feel the same way about the DAX as we do the S&P 500, meaning that we will buy puts every time the market rallies of a bid as we are testing the €8600 level. The €8500 level below is where the significant support is, so at this point in time we believe that the sellers will continue to control this market.