The fundamental environment certainly warrants risk aversion, but upcoming developments may yet inspire a recovery in sentiment. The key events to watching are the progress of the US fiscal stimulus package and the impending second round of TARP capital allocations. As prospects for their passage/implementation increase, both have the potential to fortify investor sentiment.
EUR/USD, a daily close above the 1.3050/3100 area would suggest scope for a rebound back to 1.3500/50 area. The USD index also posted a significant long-legged doji on daily candles suggesting a downside reversal, and a daily close below 85.80 points to weakness back to the 84.00 area initially.
2)stock market may see a bear market rally.
If TARP helps to remove the toxic assets off their balance sheet in to a "bad" bank as rumored,we could see a rebounded in banking sectors to lead a BEAR market rally.Financials are so oversold while we still above Nov low,which leave to being favor of long side play in coming Feb.
ESH9 Level to watch:
853area, a daily close above 853 may take us to 870-875 area. Other minus levels are 834/843.
supports are 818/808/800.
3)watch out other market for indication of market direction.
Crude close strongly on friday and likely to test 48-50 area next week.
Gold is also breakout to test a multi-months TL,we expect it will fail on more risk taking.900 is the level to watch closely.
10yrs notes close to important level 123.30, a daily close below will support our view of risk taking coming back.
next week plan: favor buying dip in risk assets.
long euro,GBP against dollar and jpy.
shorting gold on failing break above 900.
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