During the session on Wednesday, we have Crude Oil Inventories coming out, as well as the Unemployment numbers coming out of Australia. The Royal Bank of New Zealand has an interest rate announcement coming out, and more importantly a statement. With this, we could have quite a bit of volatility in the markets today.
1 – We believe that the US dollar will continue to strengthen in general, so having said that we are buying calls and puts in favor of the US dollar in various Forex pairs. We recognize that crude oil markets are in serious trouble, so if we get some type of short-term rally based upon the inventories situation, we would be waiting to buy puts at a higher level.
2 – Precious metals should continue to be soft over the longer term, so at this point in time we are looking for puts only. We have no interest in buying calls as we believe gold and silver both will continue to be beaten on by bearish traders. Ultimately, we are getting close to the holidays, and that quite often has people taking risk off yet again. Because of this, we believe that most assets outside of the US dollar will continue to struggle.
3 – The one lone exception might be stock markets in America, as they seem to be well supported below. However, we do not have any type of supportive candle in order to start buying calls yet. However, we keep our eyes on those indices looking for potential bounces to start buying calls based upon.
