Commentaries on the market
Comments as of close Thurs, 4/3/10
Basis lines pictures not getting mixed/shaky and when this happens always tougher. On big picture (monthly charts) see big downside left in Euro (& Swiss to lesser extent) and Pound, and big upside in Yen and Bonds/Notes. Feel fairly confident of additional good upside in precious metals and so want to be/go long gold/silver on any decent dips, and had one today. Stocks too unsure of at moment to be in, but see downside as side with the potential. Still see upside as side with the potential in grains, but lines too negative now to be/go long, and can fully justify shorts in Meal, and to lesser extent Beans, will go with Meal.
Big report tomorrow AM, monthly unemployment, and really don’t like this report since can foul up normal price energy flows, but part of the game. Longs in Bonds/Notes and Yen still clearest, most solid, basis line rules (and Yen now on good sized dip, even though only one day), but also like long side of precious metals (as long as Gold holds above 1125.00 on close basis, April contract) and short side of Euro and Pound (should be just question of when resume big down moves and might be now, but may need little more choppy sideways action since Euro still crosscurrent, although Pound concurrent and in position for this to strengthen (have been remiss on not emphasizing short side of this market, thought had another day before needed to).
Mar S & P - Status - Bullish/Neutral (marginally concurrent to upside). Observations - If consider trend marginally up, and can do so, then market in very mildly bullish/concurrent mode. Personally cannot muster enough enthusiasm for upside potential to justify risks of being/going long here so prefer sidelines, but can make minor case. Big report tomorrow AM and this another reasons prefer to be on sidelines. Frequently on this report market will make about two or three moves, up and down, after release of report before settling for a direction. Believe this market has much more downside potential from current level than up, but will wait for something negative on lines before trying short side.
June Bonds/Notes - Status - Bullish/concurrent. Observations - Market remains in quite solid bullish/concurrent mode and when this case longs fully justified. Decent up day to day and that indicates odds favor “bearish” (for economy, bullish for bonds) report tomorrow AM, but stocks up as well and this muddies rule (that action of bonds and stocks day before report indicates what report will be). SL has come down some now and fact price on recent highs while SL coming down is positive sign. Still have what I consider best combination for good sized, sustained move here since COT has been very bullish (for both bonds and notes) for long time and now trend and line pattern has also turned very positive. On very long term basis cannot see how US govt bonds/notes will turn out to be good investment since US govt seems headed to inevitable bankruptcy, or market equivalent, but this can take lot longer than might expect and most rest of major nations of world (particularly European ones) look to be in even worse shape. So, see sticking with longs as best, even if have to continue to ride through decent dips. Close under 117.00 tomorrow might be short term too negative to stay long over weekend, but would need to close under 116.00 to turn trend questionable and long term outlook too negative to be long.
Mar Euro - Status - Neutral (to Bearish)/crosscurrent. Observations - Really tough call here since if closes unchanged or lower tomorrow will turn SL down and create a crosscurrent sell. As rule when trend this negative should go with any/all line pattern sell signals, but then would be in situation where would have to keep pushing lower or within couple days SL would turn right back up negating the sell signal and producing yet another higher low. On big picture basis (weekly chart) picture here looks very negative and odds favor not only going lot lower, but for long time. On fundamental basis picture seems to me to be very negative since doubt have had a situation in modern market times where there is real, although slight, possibility that a currency might actually disappear. Very difficult to be any kind of intermediate or longer term bullish when there is even the slightest chance the currency might cease to exist. Am not an expert but just do not see how European community is going to solve their current financial problems and feel just a matter of time before several nations (Greece, Portugal, Ireland and Italy) default on their debt and Euro very existence is threatened, and how Euro would be dissolved is unknown, would be a disaster. Would be doing so at unattractive price level but if closes unchanged or lower tomorrow feel would be best to be/go short, and if feel will do so (close lower) can short earlier in anticipation of this.
Mar Yen - Status - Bullish/concurrent. Observations - Picture still solidly positive and so longs continue to be fully justified. Obviously would have been better to take profits and buy back lower, but this was judgment call and sometimes make wrong call. Whenever both SL and price on recent highs can make some case to take profits and wait for dip to buy back, but the one exception is when in solid bullish/concurrent mode and that was case here, at these times it becomes just a judgment call. Rule is anytime in solid concurrent mode to upside and get day or two down can fully justify initiating new longs and this now case here after today’s big down day. Whether wait for after report of buy before just another judgment call, but any price lower on day would be good enough. Had eight days of pressure to upside and markets rarely top out this easily after this much and big up move, first dip tends to be good buying opportunity. 111.00 area, on close basis, still the stop area, and even there pattern would still be positive.
Mar Aus$ - Status - Bullish/concurrent (but only very marginally so). Observations - Cand$ more positive and on solid five day up move and so doubt any dip will go far or last long. Mixed feelings on these two markets since close to having ML’s roll over to down cycle and SL/price put in bearish divergences, but action fairly positive. When this mixed and so unsure prefer sidelines, but see upside odds as better for time being, although need another day or so of sideways or slight down before could get decent price.
Apr Gold - Status - Bullish/concurrent (but little shaky). Observations - Picture still positive enough to justify longs, and after such good up move would expect first dip to be buying opportunity, regardless of what lines do next few days. Had decent down day today and so now do have first dip. Worth noting today’s dip happened essentially on reopen yesterday afternoon and held pretty well after that, plus dip held just above key 1125.00 area, and both these positive signs. Line pattern will get little mixed after next day or so, unless up sharply tomorrow, but see upside as having better potential for time being. So, close call and nothing wrong with sidelines, but after good down day see going back in on long side as worth risk, or staying long if held. Close under 1125.00, or see that after midday, probably too weak to stay long.
May Silver - Status - Bullish/concurrent. Observations - Trend is now very marginally up, but still up, and this positive. Would be very unusual after such a big up move past month, and past week or so, for market to turn down in any meaningful way. Plus first dip after such persistent, big up move past week and half tends to be good buying opportunity and had decent down day today. Seems to me only question whether to go back long here in 17.15 area, or try to get little more dip. Doubt will see any lower than 16.85 - 90 area, but could see little more down tonight/tomorrow. Prefer to be long here again after decent dip today since see upside has having more potential and don’t see significant downside risk.
Apr Crude - Status - Bullish/concurrent. Observations - All three lines up and when this case can make legitimate case to be long, especially on a Friday, but action so sluggish here past couple weeks prefer precious metals for longs.
May Corn, Beans, Wheat - All three now Bearish/concurrent, with Beans and Meal the most negative and only two can make clear case to be short (prefer Meal). Recent counter trend rally in these markets, past month, so persistent tend to doubt have much downside potential in these markets despite patterns now turning negative. So prefer to just stick with shorts in Meal put on last night and pass on other line sell signals. What now would be very positive, and a solid sign downside over for group, would be if Beans and/or Meal were to make back today’s losses (close back at or above Weds close levels). So, basis lines can be/go short any/all in group with Meal best, but prefer to just go with Meal.
May Cotton - Bullish/concurrent (but just barely now). Observations - Recent up move so big and persistent doubt this dip will last much longer or go much further. Nothing wrong with starting to go long in this area, or sticking with any longs, but SL now going down a little too fast for me and pattern about to go neutral so will stick to sidelines for now (and probably miss decent up, but so be it).
