Points and Levels for 10/8/2008

Several of the levels posted yesterday paid out very well and I’m working on putting together a little more instruction in terms of how to better use them to your advantage. Keep you posted.

Main points today:

-SPX down heavily again today (-5%) after a Fed announcement to back commercial paper. European and UK markets are consolidating but Asian investments are still getting hit hard. 960.00 area on SPX is the next target and volatility continues. Still looking deeper. As we expected, USD/JPY and carry trades have continued to decline on the back of this and still looking to sell on pullbacks. UJ now trading under 100.00.

-Oil underwent a minor correction yesterday and is about to test 88 support for the third time. Trend is still down and despite minor comments from OPEC yesterday not expecting a heavy lift upwards again until lower marks have been hit. 84.00 is still the target on crude for the time being.

-Gold is rising as USD investments migrate over to the commodity. The currency affect of this is the downward pressure on pairs like EUR/USD, etc, gets lifted a bit, but not too much. The investment in gold is not enough to sway whats going on in the equity markets right now.

-Rate cut rumors flying around for the US, UK and Europe. All three have been under tremendous pressure to cut as equity markets decline. Look for enhanced talks about these over the next week or two. The US Fed kept the rate UNCH today. The massive AUD cut yesterday got everyone on their toes in terms of shock value and now looking to other countries to follow suit.

-The dollar index fell back a bit yesterday from that 50% retracement I was discussing. Looking at the early trend tonight, expecting consolidation around this level for the time being while leaning to the upside.

Bottom line:

Carry trades are still sells and the UJ drop we have been looking for keeps on confirming our thoughts every day. EUR, GBP, AUD trends are still pointing lower but consolidation around these marks is happening as forecasted yesterday. Can go up, can go down intraday. Expect a push/pull scenario on these pairs for the time being with sells on the radar and preferred for longer runs. AUD and NZD continues to get hit hard tonight based on the carry trade scenario; keep that in mind.

Levels (just the majors right now keep checking for updates through the day):

EUR has sells at 1.3735, 1.3765, 1.3800, 1.3900, buys at 1.3478, 1.3445, 1.3378, 1.3264
GBP has sells at 1.7705, 1.7830, 1.7915, 1.7990, buys at 1.7340, 1.7270,
CHF has buys at 1.1220, 1.1090, 1.0844, sells at 1.1488-1.1500, 1.1595, 1.1770
JPY has sells at 101.50, 102.80, 103.20, 103.72, 104.50, 104.98

What I'm Reading Today:
Yen Advances Against Dollar as Stocks Plunge, Traders Reduce Carry Trades
Pound Advances Versus Dollar, Euro on U.K. Plan to Provide Cash to Banks
Bernanke Fails to Quell Market Turmoil as Investors Clamor for Rate Cuts


Thanks and good trading,
Steve