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Call Options Favoured As SP500 On Course To Test Yearly Highs -

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Jun, 15th 11:54

SP500 is making some gains today after slipping for four consecutive sessions. The index is on track to testing some near term resistance at 2076.900, adding 0.25% in comparison with the closing price yesterday after positive US retail sales data.

US retail sales were reported with a significant rise in May as Americans bought more goods and services, indicating that consumers still feel confident in the economy to stick to their usual spending patterns in spite of the slowdown in the non-farm payrolls data. According to the US Commerce Department, retail sales witnessed a 0.5% rise in May after soaring around 1.3% in April. Excluding the sales of automobiles, gasoline, building materials and food services, retail sales climbed 0.4%, following April’s 1.0% increase.

The dollar index, measuring the strength of the greenback versus other major currencies, approached a one-week high at 94.92.

The SP500 energy sector also recovered slightly today with gains in oil prices after the International Energy Agency (IEA) raised its forecast for global demand in 2016 to 96.1 million barrels a day, up 0.1 million barrels from its previous prediction. On Tuesday, the IEA estimated that the oil market will balance out in 2016. WTI for July delivery added 0.56% at $48.06 per barrel compared with the last settlement.

The markets are awaiting the result of the Federal Reserve policy meeting later today for its estimate on the state of economic growth. The Fed is not expected to raise the interest rate at the current meeting due to increasing worries about Brexit, after The Sun – an influential newspaper in Britain – has called for the county’s citizens to vote for the “Leave Camp”. The concerns have curbed the gains of the SP500.


Fig. SP500 D1 Technical Chart

SP500 has been moving cautiously between the range of 2019.82 and 2120.00 since the middle of March, awaiting clues from the Fed policy meeting later today. The buying power seems stronger as seen with the RSI near level 48 and pointing up to the overbought zone. The trend indicator suggests long positions. The price is expected to continue the current up-move, retesting the resistance level at 2120.00, the highest level of the year.

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