Commentaries on the market
Comments as of close Tues, 3/23/10
Bad day for corn and wheat and this make beans a little more vulnerable for short term downside as well. However, today’s down in corn/wheat does set up potentially very positive line patterns and this potential will turn to reality if can turn SL’s (in corn and wheat) back up next few days. So grain group shaky for next day or two and when this case OK to go to sidelines until pictures better, but still see such good upside potential prefer to give anticipation longs more chance. This just a trading decision and sometimes right on these, sometimes wrong. Sideways, and especially any up, tomorrow in grains would be much more positive than negative.
Euro on verge of breaking to new long term lows and this time may be able to do it since just turned clearly Bearish/concurrent to downside and when this case odds always favor more downside. Shorts in Pound still OK, but like Euro’s a little better at moment.
June S & P - Status - Bullish/Neutral (mildly concurrent). Observations - A solid up day as this market just keeps grinding higher. Yesterday’s quite positive relative strength was good upside sign for today. Today’s relative strength a little mixed, but nothing negative. All signs remain moderately positive for stocks so odds continue to favor higher. Other than being short term overbought, which has been for quite a while, nothing negative in picture at moment. Bottom line - Lines say can be long and have to agree. Would take a close back at least below 1152.00 area tomorrow to give chart any kind of negative look.
June Bonds - Status - Neutral/crosscurrent. Observations - Small down day but not enough to change overall neutral to marginally positive picture. Surprising to me that Bonds still holding up in face of such persistent stock market strength, but may be finally starting to weaken. Overall picture too mixed to make good enough case for position in either direction. Bottom line - Lines say sidelines and continue to agree.
June Euro - Status - Bearish/concurrent. Observations - Small, for these days, down day, but enough to turn pattern more solidly negative. Bounce off recent solid support in mid 134.50 area was much less energetic this time and this sign could be ready to break through to clear new long term lows. Would still like short side better if had at least one lower high on SL, but this the type of pattern/situation where can go considerably lower without having this. See Euro pattern as most negative of three european currencies and so best for any shorts. Pound also indicates shorts but pattern there remains solidly crosscurrent and this usually makes any down more choppy. As rule tough to go more than two, three days in row down when ML in as strong an up cycle as is at moment in Pound, but after yesterday’s up now only on one down day so could have another one or two before see some upside. Pattern in Swiss remains too mixed to make case for either direction. Lately just about best/safest trade has been long Swiss/short Euro since when Euro up Swiss essentially keeps up and when Euro down Swiss lags or doesn’t even go down. Bottom line - Lines say can be short Euro (and Pound) and agree for another day. Stops tough to place, as always, but may be OK to use fairly tight stops for tomorrow (135.50 or little higher on Euro, preferably not entered until after midday tomorrow; 151.00 or little higher on June Pound, again especially if see this midday tomorrow or later).
June Yen - Status - Neutral/crosscurrent. Observations - Another quiet, sideways day. Pattern still stuck in neutral, as is chart, so sidelines continue to look best. Bottom line - Lines say sidelines and continue to agree.
June Aus and Ca$ - Status - Bullish (to Neutral)/mildly concurrent. Observations - These two remain the most positive of foreign currencies and only ones can make legitimate case to be/go long. However, even here patterns turning less positive by day. If long any can make case to give these another day, but pattern now so shaky would put any longs on fairly strict probation (i.e., either up or out tonight/tomorrow). Bottom line -Lines still marginally say can be long and this OK, but would not stay long on much weakness (98.15 or lower on June Ca$, 90.70 or lower on June Au$).
June Gold/May Silver - Status - Bearish (to Neutral)/mildly concurrent. Observations - slightly firm up day for both these markets and with lines negative two days without any significant down is a positive sign. However, as long as SL’s down patterns will remain sufficiently negative to justify light shorts. Nothing much in way of signs from relative strength since this just bouncing around between slightly positive and negative. Sideways tomorrow would definitely be more positive than negative. Bottom line - Lines say can be lightly short either/both, but would tighten stops on any shorts since patterns just slightly negative (17.10 - 15 area in May Silver, 1110.00 - 15.00 area in June Gold - especially if see these levels after midday).
May Crude - Status - Neutral (to Bullish)/crosscurrent. Observations - upside pressure of past two days is fairly positive sign since pattern has been quite negative, but will need to be unchanged or higher again tomorrow to start to turn pattern positive. Still see odds as favoring lower, but much less so after today. Not that enthusiastic about upside prospects here, but close above 81.00 tomorrow will produce a legitimate buy signal. Bottom line - Lines say sidelines and continue to agree. Can go lightly long on close above 80.75 tomorrow, or sooner if believe will close there or higher.
May Corn and Wheat - Status - Bearish (to Neutral)/weakly crosscurrent. Observations - Solid down day in both which turns patterns at least temporarily negative. So far over anticipated by suggesting longs in these two past few days. However, now that SL’s have turned down if should be able to turn them (SL’s) back up next few days would set up excellent buy situation and this what have been looking for. Thought might now see much more down but wrong so far. So despite lines indicated shorts still prefer anticipation longs, but now this totally dependent on price holding this area and moving up enough next few days to turn SL’s back up. Still see Wheat as better for any anticipation longs. Bottom line - Lines say can be/go short and this may be OK but prefer to continue to pass on short side of these markets, and will give anticipation longs at least another day or so. (Safer to go to sidelines on any longs and wait until sure SL’s going to turn up, but will risk another day).
May Beans - Status - Neutral (to Bullish)/weakly crosscurrent. Observations - Neutral, sideways day and after such persistent up due for some sideways or down. With both price and SL on recent highs do have some short term downside vulnerability here for next few days, but see so much upside potential prefer to stick with longs. Beans held up well in face of solid weakness in corn and wheat and this a positive sign. Have always seen Beans as leader of this group and so recent solid relative strength of beans over corn and wheat should be positive warning sign for all in group. Brief turn down in SL and turn back up would create a very positive picture, but will need to pause or dip for day or so to get this. Still see Meal as just as good for longs as Beans. Personally prefer to go with Beans and then add Meal if want to be heavier positioned. Bottom line - Lines marginally say sidelines but can continue to make decent case for anticipation longs in Beans and/or Meal. Do have some short term downside risk so OK to go to sidelines for day or so if cautious, but prefer to stick with longs. As long as above 9.55 area picture will remain positive so can use that level for any stops, especially if see this late in day or on close.
May Cotton - Status - Bullish/Neutral (crosscurrent). Observations - another quiet up day, but sideways remains more positive than negative here. Fact this weak crosscurrent buy signal has gone on as long as it has (seven days now?) is a sign of underlying strength since this type of signal usually does not last any more than five days, at most. Want to be/go long this market but prefer to wait until ML gets closer to turning to up cycle. Still would like to see two, three days of down to set up lines for excellent buy, but so far not getting this. Still see lots of upside potential in this market. Bottom line - LInes now in between longs and sidelines, prefer sidelines, but want to be long if can get dip.
Chick Goslin
