Commentaries on the market
Comments as of close Weds, 3/24/10
Lots of big moves today but only ones big enough to change overall pictures were the big downs in Bonds/Notes and Yen. See those two as now negative enough for some shorts since see odds as favoring today’s down spikes turning out to be continuation spikes, not aberration spikes. Stock patterns becoming more mixed so see sidelines as better than longs there now.
Going against lines at moment, but still prefer longs in Beans, Meal and Wheat (also possibly in Corn), although need some up there soon
June S & P - Status - Bullish (to Neutral)/weakly crosscurrent. Observations - Pattern mildly positive but if should see any weakness next few days pattern will turn solidly mixed/neutral. While still positive, pattern so tenuously positive prefer sidelines for time being. No next day signal from VIX today since market down and VIX up, but VIX was up 1.20 and this quite a bit more than would expect on such a small down day and so see this as small negative warning sign for tomorrow. Week or so ago had number of markets (stocks, many currencies, crude, precious metals) that had very similar momentum line patterns. Now all of these except stocks have sold off decently, this an additional negative warning sign for stocks. Bottom line - Lines marginally say can still be long, but too shaky for me now so prefer sidelines. If want to stick with any longs would not do so on close below 1155.00 area.
June Bonds/Notes - Status - Neutral (to Bearish)/crosscurrent. Observations - Trend sideways now but also now within the margin of error to call it down. ML and SL both down and this indicates odds for next few days favor downside. Worth noting ML on third lower high and this always negative sign. Today clearly a down spike and so question is whether will turn out to be an aberration spike or continuation spike. Not sure what the news was to spark today’s big down, but personally believe could be delayed reaction to budget busting/deficit increasing health care reform bill. When govt increasing debt levels at such a rapid and huge rate believe it’s only matter of time before b bond/note market crumbles. Never know when this point will be hit, but see good chance this point will turn out to have been today. See much more downside potential in this market than upside and so believe should pay attention to any clear negative signs. Problem with being/going short here is price “poor” (i.e., recent lows) and so need to risk decent amount on any shorts, at least for short term. Worth noting that recent relative weakness of Bonds vs Notes turned out to be an accurate downside warning sign (bonds tend to lead notes and had day couple days ago where notes were up 10 points but bonds unchanged). Bottom line - Lines say sidelines and this OK, but see so much downside potential feel at least light anticipation shorts as worthwhile, especially if can get little rally to short into. For time being stops on any shorts need to be on generous side with little above 117.00 on June Bonds OK for now and same price area on any shorts in June Notes.
June Euro - Status - Bearish (concurrent). Observations - As expected finally got clear break through recent solid support in 134.50 area. Low energy bounce off this support couple days ago was good clue market was ready to break to new lows. Question is what now? Market so solidly concurrent to downside see odds as clearly favoring lower prices, but at same time now short term oversold since both price and SL on recent lows. 134.50 - 135.00 former support area “should” now become resistant area. Would not be surprised to see two, three quieter, sideways to slightly higher days but any upside “should” be limited in both time and distance. So, nothing too wrong with taking profits and waiting for two, three days sideways to up to short again, but see upside as limited so probably best to just stick with shorts. If happen to be short both Euro and Pound see better case for taking profits in Pound. This market now on third/fourth day of a weak crosscurrent sell signal and these only tend to last two to five days. ML in Pound still on good up cycle and tough to get more than two, three down days n row when go against solid up cycle in ML (now on second down day in row and so any more down tonight/tomorrow would be third day in row down). So prefer to take profits on any shorts in Pound with idea of shorting again on next several day rally. Swiss now also Bearish/concurrent but see Euro, and to lesser extent Pound, as much better for shorts so prefer to stick to sidelines in Swiss. Bottom line - Can be short Euro with stops at least above 135.00, especially if close above there. Lines say can be short Pound and this OK but prefer to take profits. LInes say can go short Swiss and this may be OK but prefer to stick to sidelines.
June Yen - Status - Bearish/concurrent. Observations - All three lines now down so lines indicate can be/go short. Today’s big down clearly a down spike and since essentially turned trend down have to consider it will be mostly turn out to be a continuation spike. Did not expect what saw in Yen today and was actually expecting eventual breakout of recent sideways would be to upside, not down. This market has a habit of chopping around aimlessly for while and then suddenly putting in huge day. Lines justify going short but problem is so far from stop point have to risk quite a bit. Always possible today’s down spike could turn out to be aberration as well. Regardless, should always go with clear line patterns and this is negative at moment. So, if can short above 109.00 see this as worth risk. Bottom line - Lines say can go short (preferably at least above 109.00) and have to agree but risk on high side. Stops tough to place but somewhere in 110.00 to 110.25 area looks OK for now (especially if see this after midday tomorrow).
June Aus and Ca$ - Status - Neutral (crosscurrent). Observations - Very mixed picture here now basis lines and so see sidelines as best now for time being. Felt positive picture was getting very shaky here past few days and today’s moderate down turned pattern too mixed to safely stick with any longs. Up trends a little too strong and market a little too short term oversold to justify any shorts here, and too mixed for any longs. Bottom line - Lines say sidelines and have to agree now.
June Gold/May Silver - Status - Bearish/crosscurrent. Observations - Decent down day with confirmed short term negative pattern have had past few days. However, don’t see overall picture as solidly negative and on longer term basis still see upside potential in these markets as better than down. For time being though lines only justify shorts and cannot make any case for longs and continue to agree with this, for time being. If prices can avoid any big down next week or two “should” begin to set up well for upside, but will have to see if they can do this. Negative weekly line patterns in both these markets, especially Gold, gave good clue that just not ready for sustained up in these markets at moment. However, weekly line patterns could turn quite positive in two weeks or so, if, and this big if, prices can hold in this general area. Would also like to see some improvement in very negative COT situation in gold on this dip, but will have to see if get this. Bottom line - Lines still say can be short either/both and continue to agree, but only on light basis see skeptical of downside potential. Should be able to lower stops again after today with just above 17.00 in May Silver and 1105.00 area in June Gold (especially if see these levels after midday tomorrow).
May Crude - Status - Neutral (to Bullish)/crosscurrent. Observations - Down enough today to keep pattern neutral, but just barely. For whatever reason this market holding up better than currencies and precious metals and this a positive sign for crude. Too mixed to make good enough case for position in either direction at moment, but would be easier to get decent case for upside than downside. COT so negative that with negative lines past few days would have expected more down than have gotten so far and this another upside warning sign. Bottom line - Lines say sidelines and continue to agree.
May Corn, Beans, Wheat - Bearish/crosscurrent. Observations - Lines on all three now on weak crosscurrent sell signals. Never comfortable when go against lines but still see so much more upside potential here continue to prefer to ignore these weak sell signals and stick with any anticipation longs. While Beans down decently today expected downside pressure and did not see anything too negative. Actually believe today’s action in these three encouraging for upside argument. Needed to turn SL’s down to set them up for turning up from a clear higher low and now have done this. Safer to wait for turn up in SL in all three before being/going long, but if already long see enough potential positives to give these at least another day or so. Still see Beans (and Meal) as best bets for any anticipation longs, with Wheat next and then Corn (and Oil). Would see closes back above 3.70, 9.70 and 4.87 as confirmations significant bottoms have been made and expect (hope) to see these in next two, three days. Bottom line - Lines say can be short any/all three, continue to prefer to pass on these and still see so much upside potential prefer to give any against trend, anticipation longs at least another day. Moves, especially after midday, below today’s lows would be little too negative to stick with these against trend longs.
May Cotton - Status - Neutral (crosscurrent). Observations - Finally got some decent downside action here and this turned pattern neutral. Now would be nice if should see another few days of choppy lower, but market may not cooperate. Regardless, at moment cannot make good enough case for position in either direction so sidelines look best. Still see so much more upside potential than down, and due to strong up trend, only looking to trade this market from long side, but need better line pattern before can make good enough case for longs. Bottom line - Lines say sidelines and agree.
Chick Goslin
