Commentaries on the market
Comments as of close Mon, 3/1/10
Tough day, got a remedial lesson in dangers of trading against trend. Beginning to think deflation scenario going to win out, but over the years have found that grains/cotton tend to move on their own. At moment the clearest/most solid patterns remain long sides of cotton, bonds/notes and yen, but each of these short term overbought so may need to pause/dip a little before can move up decently (although cotton pressure to upside relentless). Needed dollar to push lower to add to argument for some kind of top there and instead it was quite firm, and continue to feel dollar may be key to most other markets next significant direction move.
Precious metals have moved up recently despite lack of weakness in dollar and so no reason cannot continue to do so, but wanted to see some acceleration to upside today in those markets and did not get it, but maybe tomorrow. However, longer they fail to move up decently from these levels the more precarious longs will be.
A little unsure of things after today so am now mostly on sidelines until see some more action next day or two, but basis rules any further dip in bonds/notes and yen “should” be decent buying opportunity (and can fully justify being long some of these two now), although with stocks so strong today may need another day and or two dip in bonds and yen since these tend to move opposite stocks
Mar S & P - Status - Bullish/Neutral (crosscurrent). Observations - Solid up day with close on highs of day and Russell & NSDQ leading all day - all this short term positive. Trend indecisive but momentum line remains positive with ML on up cycle and SL turning up for third higher low. Can still make some case for longs. Stops would probably need to be in 1105.00 area.
June Bonds - Status - Bullish (concurrent). Observations - Market now on small one day dip and so any further down and will be able to make decent case to initiate new longs (anytime in bullish/concurrent mode can justify initiating new longs on one to two day dip). Holding well despite solid up day in stocks and this positive. COT very bullish and has been for long time and when this case and market goes bullish/concurrent odds for further upside good. More dip would make safer buy but can fully justify being long and going long, especially on further dip. Stop area tough to select since would want to buy dip anywhere down to 116.16 area.
Mar Euro - Status - Neutral (to Bearish)/crosscurrent. Observations - Rally ran out of steam very quickly, but when trend this negative this tends to happen. Thought would get at least another day or two up but obviously wrong. Rule for crosscurrent mode is to expect choppy/sideways and when trend this negative should expect downside bias to this choppiness. To volatile for me to short at moment, but another rule says when trend this negative should go with any sell signal and get much down next day or two will get another crosscurrent sell.
Mar Yen - Status - Bullish/concurrent. Observations - Clearly positive picture here with only “negative” short term overbought due to SL being on recent highs and price on week long up move to recent highs. Longs fully justified here and “should” be just a question of when/where best to initiate new longs. Now on one day dip and anytime in bullish/concurrent mode and get one to two days down can justify adding to longs. Stops need to be in 1110.00 area so decent risk, but has plenty of upside potential since pattern in position to strengthen over next week or two.
Mar Aus$ - Status - Neutral (to Bullish)/crosscurrent. Observations -Small up day in Au$ but Ca$ had surprisingly big up day and these two tend to move together. Trends of both mostly sideways but could turn up fairly easily. Momentum line patterns decently positive but both need to keep pushing higher otherwise would turn negative by end of week. Some longs fine here but close under Friday’s close would probably be too negative to stay long.
Apr Gold - Status - Bullish/concurrent. Observations - Pattern bullish and so longs justified, but just mildly so and so still precarious. Market set up well for good up today and did not do it and this negative warning sign, but still a positive picture and markets go when they are ready, not on my schedule. However, continue to view sideways at moment as more negative than positive since if still in this area by end of week/beginning of next week pattern will turn too neutral/negative for longs. Close above 1125 and especially 1130.00 would give chart and pattern nicely positive look, but action sluggish past day and half and longer this case the less would like longs. Platinum little stronger than Gold and this small positive since Plat tends to lead. Really would not want to see price much back under 1110.00, especially on close basis.
May Silver - Status - Neutral. Observations - Trend down but ML up so market remains in solid crosscurrent mode. Momentum line pattern still positive though so despite small down today and somewhat weak close odds should still favor upside. Market rallied 1.05 in three days and so some down probably not that big a deal, but when have patterns like this one want to see SL pick up speed to upside and need to move up next day or two to get that. Some against trend longs still OK here but longer goes without more up lower odds will be on these. Stops on any longs probably need to be in 16.25 - 30 area, especially if see this late in day or on close.
Apr Crude - Status - Neutral (to Bullish)/crosscurrent. Observations - Quite negative day since was set up well for good up and instead had big down. Too weak for me to stick with longs but can still make OK case for some anticipation longs, although would really need to be up decently tomorrow.
May Corn - Status - Neutral/crosscurrent. Observations - Trend down but ML up so market in crosscurrent mode Quite negative day with close on lows, but price did not violate lows of past week and so not as bad as felt. Too weak for me to stick with longs, but still see much more upside potential than down, despite down trend, and so if had to be in still would be long, not short. If can hold tomorrow and move up some next day then would be able to make some case for against trend longs again, but for now have to respect down trend and be on sidelines until/unless steady/firm next couple days or so.
May Beans - Status - Neutral (to Bearish)/crosscurrent. Observations - Beans held up best today and this always a positive for group since Beans tend to be leader. Despite down trend still see upside as side with best potential so prefer to pass on any shorts. Always like being/going long in this group best when beans leading on upside so this was one small positive on an otherwise quite negative day for group. Unless down sharply tomorrow SL will turn up and this always at least a small short term positive, but for now overall picture too mixed/negative to make any kind of legitimate case for against trend longs and just don’t see sufficient downside potential for shorts, despite down trend.
May Wheat - Status - Bearish/crosscurrent. Observations - Very negative day on big down after making new multi week highs on open of overnight market. As with others in group despite down trend and now negative SL pattern not interested in short side since just don’t see sufficient potential, but basis lines can make small case. In past whenever COT this bullish “eventually” see big up move but rule is supposed to wait for trend to turn up before acting on this. Thought had enough positives to jump the gun on this, but so far wrong. Too negative today for me to stick with longs, but if SL gets in position to turn back up in few days may try it again.
May Cotton - Status - Bullish/concurrent. Observations - Another firm up day with close on new highs. Basis lines longs remain fully justified and still no negative warning signs. As said past couple days when get pattern as positive as this one and get up move as big and persistent and have had here past three weeks, as rule only risk is temporary (although can be fairly sharp) since first dip virtually always short lived and turns out to be excellent buying opportunity. No idea why this market has turned so strong, especially on days when almost all other commodities very weak. Would not initiate any more new longs until get some kind of dip, but even though probably feels “precarious” up at these levels, usually not the case since when pictures this positive price tends to just keeping going higher, and for longer and farther than most think possible.
Chick Goslin
