Commentaries on the market
Comments as of close Mon, 3/22/10
Continue to feel long side of grains (especially beans, meal and wheat) have lots of upside potential and patterns turning increasingly positive. Still not quite solidly positive yet so any longs here are anticipation longs so far, but see excellent risk/reward and good upside odds so see being at least lightly long now with idea of adding over next few days as good approach.
Precious metals and crude have quite negative patterns for short term so see odds still favoring lower there. Currencies tough to call, as always, but patterns increasingly negative on Euro and Pound, and increasingly less positive on Au and Ca $.
June S & P - Status - Bullish (to Neutral)/mildly concurrent. Observations - Good upside reversal day with market down overnight due to Health Reform bill passing, but as usually does came back well to close firm. The negative relative strength saw on Friday was immediately reversed early in day and relative strength stayed quite positive all day and into close. Line pattern just marginally positive and tough to be/go long after such big, sustained up move, but relative strength so positive see odds for tomorrow, at least, as favoring upside. Bottom line - Lines say can be long and cannot argue with this, at least for tomorrow. Stops on any longs probably OK in 1153.00 - 1155.00 area, especially if see this after midday.
June Bonds - Status - Neutral (to Bullish)/weakly crosscurrent). Observations - Another sideways type day which did not change neutral to slightly positive line pattern. Still see overall picture here as more positive than negative, but just cannot generate much enthusiasm for long term upside potential in these markets and this makes being/going long difficult unless pattern clearly positive, and that not case at moment. For a change Notes were stronger than Bonds today. This probably not significant but tend to find the bonds lead notes and so relative strength for notes today may be a negative warning sign. Feel this market eventually will go significantly lower due to endless huge govt deficits, but this can take long time to have impact. Bottom line - Lines say sidelines and agree.
June Euro - Status - Bearish (concurrent). Observations - Even though up some on decent upside reversal, pattern turned Bearish/concurrent and whenever this happens and trend so clearly down odds will favor more to downside. Only thing missing for a solidly negative pattern here is on a single high in SL and always prefer to have at least one lower high when going short, or close to getting such. However, this type of pattern is type that can keep pushing prices lower without a lower high on SL. Exceptions always tend to work more often when in direction of a clear trend. A day or two of sideways type action would create better shorting situation, but market may not cooperate. Still a little unsure whether have big downside potential in Euro and Pound (maybe Swiss as well), but should never argue too much against a clear trend. So close call whether to short again now or wait to see what happens tomorrow. Feel trends so negative in Euro and Pound should give benefit of doubt to short side, especially since had good rally off overnight lows (so shorting into some strength). Bottom line - Lines say can be/go short Euro and/or Pound and while close call (can make some case to wait another day or so) at end agree with this. Stops tough as always in currencies but 136.50 - 137.00 area and 151.50 - 152.00 area look OK.
June Yen - Status - Neutral (weakly crosscurrent). Observations - Another two sided day with market ending back up where it’s been for past two weeks. This market really stuck in sideways pattern and until breaks out sidelines probably best. Still see weekly chart as potentially much more positive than negative. Bottom line - Lines say sidelines and continue to agree.
June Aus and Can$ - Status - Bullish (to Neutral)/mildly concurrent. Observations - Patterns still positive and so continue to indicate longs justified. Tough to hold any longs in Canadian Dollar today though since showed little too much weakness, although now up decently in overnight. Stops in currencies have been extremely difficult to place recently since intra-day swings have been so big. Not sure what to do about this other than just reposition if stopped out and market doesn’t go any further. Bottom line - Lines say can be long either/both and agree. Stops tough to place but really would not want to see prices back near or especially below today’s lows.
June Gold/May Silver - Status - Bearish (concurrent). Observations - Can consider trends marginally down and if do market in bearish/concurrent mode. On big two day sell off but patterns remain quite negative for at least short term so see sticking with any shorts a while longer fine. Dollar action will continue to impact these markets and picture there cloudy, although dollar index is now bullish/concurrent and so odds favor higher dollar near term. Relative strength was all over place past day in this group but on short term basis see it as little more negative than positive, but close call now. See weekly charts as sufficiently long term positive tend to doubt have big downside potential in these markets, but for now cannot make any legitimate case for longs and can make decent case for shorts. Bottom line - Lines say can be short Gold and/or Silver and continue to agree on light basis. Stops in 1115.00 area basis June Gold and 1720.00 - 25.00 area basis May Silver look OK, especially if see these levels after midday tomorrow.
May Crude - Status - Neutral (crosscurrent). Observations - Big upside reversal day after being sharply lower completely reversed and closed decently higher. Trend up but not real solidly and rest of picture remains quite negative on short term basis. Add in extremely bearish, long standing, COT in background and “should” go lower, but had good chance today and came back very well. As said never have much interest in short side of this market (as don’t have interest in shorting grains in summer or orange juice during freeze season - too much event risk) so will stick to sidelines, but odds favor lower despite today’s positive action. Bottom line - Lines say sidelines and agree.
May Corn, Beans, Wheat - Status - Neutral (crosscurrent). Observations - Trends only marginally down now, and close to being within margin of error to consider up in Beans. ML’s now turning positive and in position for sustained up cycles (since have had SL’s below zero for two plus weeks). SL’s a little on high side and need to put in higher low before will be solidly positive which indicates potential for some short term weakness, but any down here should be limited in time and distance. Continue to see overall pictures here as potentially very positive and just need to put in higher lows on SL’s to have potentially really positive pictures. COT remains very bullish on all three and rule is this tends to produce good sized, sustained moves (up here) when finally do turn trends up. So if can turn trends up next week or two “should” lead to good sized, sustained up moves. Bottom line - LInes still say sidelines but continue to see anticipation longs as well worth risk. Would rank preferences for longs as Beans first, then Meal, Wheat, Corn and finally Bean Oil.
May Cotton - Status - Bullish (crosscurrent). Observations - Minor up day but this impressive since overdue for this weak crosscurrent buy signal to end (persistent strength, lack of weakness, into such solid down cycle of ML is an upside warning sign. Just cannot be/go long with current pattern even though it’s marginally positive. If can get several day dip in SL and price would set up excellent buying situation, but for now will stick to sidelines.
Bottom line - LInes say can be long and so far this working better than expected, but will stick to sidelines.
Chick Goslin
