The E-Mini S&P finished down 0.29% at 1204.75

S&P 500 (Sep 11) INTRADAY

Review The E-mini S&P consolidated Friday?s and Monday?s gains yesterday closing almost unchanged on the session in a day of mixed direction . There was a slow drift lower through the European morning as mild dollar strength and EU debt concerns slightly eroded the underlying positive sentiment. The E-Mini S&P hit our entry point long at 1196.50 at 13.55 and found solid support. The worse than expected US Consumer Confidence number provided a very short term sell off but ultimately positive sentiment overrode this negative and equities rallied back and eventually made new. The E-mini S&P eventually hit the high of the day at our second profit target of 1219 following the FOMC minutes which suggested the FOMC discussed further stimulus. Profit taking into the close meant the E-Mini S&P finished down 0.29% at 1204.75.

Strategy The reaction of the S&P to the terrible Consumer Confidence number yesterday is strong evidence that the underlying positive sentiment in the market place is the dominant factor on market direction. This morning the E-mini S&P has drifted back to test last night high at 1218.75 and the main focus switches to the ADP Employment report and Chicago PMI numbers due out this afternoon. The July US employment data saw the ADP and Non-Farm Payrolls numbers converge (114k and 117k respectively) after the June readings were complete opposites. Whilst the ADP number will be of interest, traders will be assigning much more importance to Fridays Payrolls numbers and so the Chicago PMI and Factory Orders numbers due at 14.45BST and 15.00BST may take precedence today. We continue to favour the upside based on positive risk appetite and have an entry point long at 1210.00

Alternative Scenario Further bad US economic data today may finally reverse market sentiment and profit taking would lead to a break below support at 1201.75 and attest of Yesterday?s low at 1193.50

EUR/USD INTRADAY

Review EURUSD underperformed yesterday relative some other correlated markets such as equities. The risk appetite during Friday?s and Monday?s session pushed the currency pair up to the top end of the medium term range with the Euro making a new eight week high. But despite equities continuing higher yesterday EURUSD had a large sell off in the first half of the session. The ECB are still having to buy Italian debt in order to keep yield spreads in check and some investors are beginning to think that the two interest rate hikes earlier in the year may have to be reversed. This prevented the Euro from making further gains and a 150 pip sell off took the market down to 1.4385 before stabilising after worse than expected US Con-sumer Confidence and a dovish FOMC Minutes.

Strategy It has been a relatively quite morning with the Eurozone inflation and unemployment data doing little to influence market direction. EURUSD is chopping around in the middle of yesterday?s range. Direction in the short term is still hard to judge and we do not expect the US economic data this afternoon to improve this problem. US ADP Employment is due at 13.15BST , Chicago PMI at 14.45BST and Factory Orders at 15.00BST. In the short term, following yesterday?s sell off, we would favour the EURUSD to drift higher today if there is continued risk appetite. However our medium to long term view is beginning to switch to the downside for theis currency pair. Today we have a long entry at yesterday?s low of 1.4385 expecting a bounce off better than expected US economic data.

Alternative Scenario Negative news flow from Europe will continue to undermine the Euro strength and this would lead to a move lower. A break of S1 support at 1.4367 may lead to a test of last week?s low at 1.4328.

US 10Y T-Note (Dec 11) INTRADAY

Review The main impetus yesterday was given by Fed?s Evans who suggested that QE3 may well be possible. This, combined with a 28 month low in US consumer confidence, which came in at 44.5 versus 52.5 expected, supported T-Notes throughout the afternoon stopping our short entry at 15:00 BST. Even as stocks shrugged off the poor confidence data, which is believed to be negatively overweight, T-Notes held onto their gains, ranging between 130.080 and 130.190 (Sept Contract) as firm resistance.

Strategy Despite the correction in sentiment over the last week, strategies that assume this might lead to a drop in Government debt demand have not been successful. Now that more monetary support is being muted shorts are likely to remain thin on the ground for US Government debt. However, having said that this afternoon we have durable goods data, which we expect to beat expectations. The trend has been for confidence and sentiment data to be poor but underlying economic data to resemble more realistically the growing (all be it slowly) US economy with a lower chance of a double dip recession. Our entry point long on the December contract today is conservative at 129.065 which was a tri-ple resistance level on august 25th for this contract.

Alternative Scenario Much better than expected durable goods may dampen demand for T0-Notes despite the monetary easing environment erasing yesterday?s firm gains.

Crude Oil (Oct 11) INTRADAY

Review Crude prices continued the upward trend yesterday and made an important test of Resistance from the 17th August high at $89.00. Oil prices drifted lower in the first half of the session and found support at Thursday?s high at $86.56 before bouncing and making a strong move up to briefly break $89 and make a new 3.5 week high at $89.21. Crude then stabilised and drifted sideways ahead of the API Inventory numbers. Oil closed up 1.87% at $88.90

Strategy The API numbers last night were mixed with a large increase to Crude stock piles of over 5 million barrels and a large draw down of Gasoline stock piles of over 3 million barrels. This information did very little to move the market and we await this afternoon?s DOE inventory data fro further guidance on US supply. This morning Crude price drifted up to test yesterday?s high and found resistance making this level at $89.21 a strong double top. Prices have slipped back to test support at $87.72 since then and this is our entry point long for this afternoon?s session. We expect the general upward trend fuelled by positive investor sentiment to continue and look for a break through $89.21 and then a test of R1 resistance at $89.92. The main focus this afternoon will be on USD ADP Employment due at 13.15BST, Chicago PMI due at 14.45 BST and Factory Orders due at 15.00BST.

Alternative Scenario Worse than expected US economic data may lead to a continuation of the sell off seen in the last two hours. A break below yesterday?s low at $86.46 may lead to a test of S2 support at $85.44

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Source: http://www.fxstreet.com/technical/forex-signals/indices-and-oil-strategies/2011-08-31.html

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