Commentaries on the market
Comments as of close Mon, 3/15/10
Despite decent down day in Euro/up in Dollar still see decent short term positives in most foreign currencies/negatives in dollar, but will need to see dollar weakness tomorrow or will have to give up on this idea. On straight line pattern basis only markets with clear patterns are the grains (all quite negative, even Bean Oil getting that way now). Continue to feel the dollar will be key and despite today’s decent up there, still see patterns there as short term negative (for dollar, positive all other currencies except Pound) and still a chance something significant going on in way of potential trend changes, but really need to see resumed weakness in dollar tonight/tomorrow (strength in Euro). So on straight, strict line basis nothing really attractive at moment, but if should get some decent up next day or two in foreign currencies and precious metals patterns would go at least temporarily Bullish/concurrent.
June S & P - Status - Neutral (to Bullish)/crosscurrent. Observations - Lines still say sidelines and hard to disagree with that. However, do have some very short term negatives after today. First had a decent next day down signal from VIX since VIX up .42 on a small up day in Dow. Rule is VIX normally moves opposite Dow (Dow up VIX “should” be down, and vice versa, since VIX just insurance rate on a down market and when market up insurance for down move should be cheaper, not more expensive as was case today). Second minor negative was for first time in weeks NDX and Russell 2K were relatively weaker than Dow and S & P, not by much but this was case all day and on close. So with market very short term overbought and two small negatives for tomorrow see odds as good will have down day tomorrow. Unlikely to see significant down since recent up move so big and persistent, but for at least tomorrow odds favor lower. Bottom line - Lines say sidelines and agree (but can make case for very short term shorts, day trade?).
June Bonds/Notes - Status - Bullish (to Neutral)/concurrent. Observations - Lines still positive enough to justify some longs, but action not very impressive so far on this buy signal. Window of opportunity for upside still open, but still view sideways as definitely more negative than positive. So far nothing great on this buy signal, but markets move when they are ready and so still could surprise. Stops on any longs should be able to be raised to today’s lows now. Bottom line- Lines say can be long and see this as fine on light basis with stops now probably fine in 116.16 area in June Bonds, and about same area in June Notes.
June Euro - Status - Bearish (to Neutral)/crosscurrent. Observations - No follow through to very good up day on Friday and this quite negative, but even though down enough to hit suggested stop area. Plus turn down in SL today was extremely slight and if up decently tomorrow would just get one more higher low in SL. So disappointing day for bull side, but not necessarily a killer for upside. SL did not turn down in Swiss and so positive pattern still exists there. So difficult to justify longs when lines negative, even if only very slightly, but if should close back above 137.30 tomorrow positive pattern would return, and any up in Swiss would keep pattern there still positive. Bottom line- Lines say can go short Euro, prefer to pass on this for now and would go back long on good up day tomorrow (and longs in Swiss still justified, but needs to be up tomorrow).
June Yen - Status - Bullish (to Neutral)/concurrent. Observations - Minor up day after some decent early weakness, but also seeing some good strength early in afternoon session.Lines still marginally justify longs and see this as OK, but sideways still much more negative than positive and so if long any needs to be up decently tomorrow (preferably close above 111.00). Bottom line - Lines say can be long and see this as OK, but could be an up or out situation since down day would be too negative to be long.
June Aus$ & Can$ - Status - Neutral (to Bullish)/crosscurrent. Observations - No change in mixed line pattern despite decent down day, but not negative enough to change overall positive picture. Usually when get a single bearish divergence like have in these two at moment when trends clearly up, any dips tend to be limited in time and distance and “usually” end up being good buying opportunities. Continue to believe this will turn out to be case and if so today’s dip “should” be decent buying opportunity. Bottom line - Lines say sidelines and this fine, but longer hold around today’s closing levels the better the case to initiate new longs. Would not hold any longs if down much more tomorrow (25 points or more).
Apr Gold/May Silver - Status - Bullish (to Neutral)/crosscurrent. Observations - Decently positive day for precious metals since dollar strong all day yet precious metals held well and closed firm and near highs of day. Relative strength had weakened some late Friday and early today, but by end of day was back to somewhat positive. SL’s turned up or turning up on all three pm markets and since SL’s have been down for a week and have been putting in about week long swings odds now favor upside for next few days to week. So sideways now would be more negative than positive since “should” go up. Bottom line - Lines say can be/go long either/both and agree, but stops probably need to be fairly close (area of lows of past few days especially if see these levels after midday tomorrow).
Apr Crude - Status - Neutral/crosscurrent. Observations - Pattern very mixed and action quite negative so sidelines continues to look best. Was wondering today whether past history would show that anytime Crude down 50 points or more on Friday’s whether then down decently on Monday’s, my guess is yes since this market tends to be up going into weekends so when is not a good sign short term pressure fairly heavy to downside. At moment momentum too negative for longs, but trend too positive for shorts. Bottom line - Lines say sidelines and agree.
May Corn, Beans, Wheat - Status - Bearish/concurrent. Observations - Lines still clearly negative on all three in group and so on this basis shorts remain fully justified. Still skeptical of downside potential in these markets, especially at these low levels, but so far this has been wrong since clearly negative line patterns has produced good down moves. Bottom line - Lines say can be short any/all in group and see this as fine but missed these so will stick to sidelines.
May Cotton - Status - Bullish (to Neutral)/crosscurrent. Observations - On second day up on a very weak crosscurrent buy signal and these only tend to last two to five days. When ML down cycle this strong up moves tend to be even shorter lived (two to three days). So light longs still OK but would put any longs on fairly strict probation (meaning up or out tomorrow). Bottom line - Lines say can be long with stops OK in 80.25 - 50 area. See this as OK but too shaky so prefer sidelines.
Chick Goslin
