Looking at the day on Tuesday, the only thing that really comes out and grabs our attention is the GDP numbers coming out above the United States and Britain. With that being the case, the real focus of the day is going to be on the FTSE, the GBP/USD Forex pair, the US stock indices, and the US dollar in general.
Looking at the GBP/USD pair, we tried to rally during the session on Monday but quite frankly just can’t pick up any traction in one direction or the other. We are still in the middle of consolidation, so it’s hard to imagine anything significant happening unless of course the GDP number out of London is way out of whack. Ultimately though, this time years difficult to imagine any significant numbers coming about that would move the market in a significant way, so quite frankly any rally at this point time should serve as a short-term put buying opportunity. The FTSE looks as if a pullback is coming, but we see that as potential value and a call buying opportunity.
FTSE
The EUR/USD pair is a similar situation in the fact that it has rallied during the session on Monday, but quite frankly there is no reason to think that the Euro is simply going to be the currency to own. The US dollars the favored, so therefore any rally at this point time we are buyers of short-term puts. We don’t recognize this as being the ideal conditions for significant move, so we are not looking for big positions at this point in time.
The S&P 500 looks like it’s ready to pull back from the 2080 level again, and while some would look at that as a failure, we believe that it is simply a sign of the times. In other words, we are at highs and also in the middle of the Christmas week. In other words, a pullback should be thought of as value.