Commentaries on the market
Comments as of close Fri, 4/30/10
Trading Day by Day, copyright 2010
Comments as of close Fri, 4/30/10
Trading is strange in that many times when am most optimistic on trades they don’t work out that well and when am most skeptical they can work quite well. Was quite unsure of all positions Thursday evening yet Friday turned out to be a very good day.
Big down moves in stock market are always unlikely from historical perspective, but if ever going to have a big, fast down in stocks would expect to see indicators as they currently are. When stocks do go down hard and fast this can impact virtually all other markets. So if stocks should start to accelerate to downside should keep any eye on them even if not positioned there since that could have negative impact on all other markets except interest rate markets, US dollar and maybe Yen.
June S & P - Status - Neutral/crosscurrent. Observations - Trends still solidly up in these markets but other than that lots of negatives now. Had the more reliable type of downside weekly reversals in all four stock indexes this past week (prices made slightly higher highs but then closed sharply lower on week). Have see this mark significant turning points in stock market many times, but bottoms and tops. Had a less reliable downside weekly reversal in S & P week or so ago that did not lead to any further down, but this time had this in all four indexes and were the more reliable type. ML’s on solid down cycles and in position to maintain these. SL’s making long series or lower highs/lows and this producing multiple bearish divergences with prices and this often signals impending trend changes. Basis put/call ratios and other sentiment indicators complacency about downside risk quite high and this tends to precede good sized down moves. So, basis lines sidelines indicated since trends too positive to make legitimate case for shorts, but rest of picture too negative for longs. Personally see enough negatives and enough downside potential to justify at least light against trend, anticipation shorts, but any time go against trend odds less. Bottom line - Lines say sidelines and this may be best, but slightly prefer against trend , anticipation shorts in any/all four indexes. Stops need to be in 1200.00 area in S & P and comparable levels in other three, especially if see these levels after midday.
June Bonds/Notes - Status - Bullish (to Neutral). Observations - Every time I am ready to give up on upside of these markets they have a good up day, which happened on Friday. Up day was good enough to keep patterns positive, but just barely and has to keep pushing up or will turn neutral. Main problem with these markets here is seems like need good down move in stocks to keep bonds/notes up. Never like trading a market that is so dependent on action of another market, but that’s the situation in interest rate markets at moment, or seems like it. See decent downside chance for stocks and if this true then upside in bonds/notes should still be OK, just remain skeptical of long term upside potential of these markets and when this case difficult to be more than lightly positioned or have much conviction about trade. Bottom line - Lines say can be long either/both and this still OK. Stops probably still need to be fairly close though with 117 1/4 to 1/2 OK in June Notes and a little under 118 in June Bonds, especially if see these levels after midday.
June Euro - Status - Bearish/Neutral (indecisive). Observations - Patterns back essentially to neutral on all three european currencies. So much news influence in these markets at moment, and probably will continue for at least a while, and this makes trading them very difficult. The weekly charts on all three are potentially quite positive and would turn to actually quite positive if should see even one good up week. Sentiment seems very negative on Euro and easy to see why since actually possible this currency will go out of business in few years and this about as negative a factor a currency can face. On strict basis shorts still slightly indicated in euro and swiss, but overall just too mixed on patterns and too much news influence so prefer sidelines for at least another day. Bottom line - Lines in between negative and neutral, too mixed for me so prefer sidelines in all three european currencies.
June Yen - Status - Bearish (to Neutral)/concurrent. Observations - MIxed day on Friday with market quite weak early but then turned firm rest of day; however, did close low enough to turn pattern slightly negative. Both daily and weekly line patterns and charts negative now and if should get much more down in position to turn solidly negative. Don’t like to let “feelings” interfere with lines too much, but having difficult time getting negative on this market, despite negative patterns. Entire currency picture looks too mixed/shaky to me to be in at moment so will stick to sidelines in Yen for at least another day, but basis lines can fully justify being/going short. Bottom line - Lines say can be/go short and see this as OK but will pass for moment. Stops on any shorts look OK anywhere from 106.75 up to 107.50, i.e., tough to place.
June Aus and Ca$ - Status - Neutral (crosscurrent). Observations - Pattern in Au$ very marginally positive but will call it neutral since will be in another day or so, unless rallies sharply. Very negative day for C$ on Friday and this brings price back to low 98.00 area for third time in past two weeks and this a clear negative warning sign (with trend this positive should not come back down to this level so often in such short period of time). Weakness in C$ surprising since it tends to move with crude and crude up on Friday. Patterns on these two markets are so mixed/sloppy at moment see sidelines as best, but recent weakness in C$ has to be seen as a downside warning sign. Bottom line - Lines say sidelines (or close to it in Au$) and agree.
June Gold/July Silver - Status - Bullish/crosscurrent. Observations -Good up day for Gold on Friday and was for Silver as well until had fairly big late sell off there. Friday another day of negative relative strength and this becoming an increasing concern since getting a little too persistent for comfort. Seems like buying is more from a “fear” perspective (not sure what the fear is) since this type of buying tends to be focused in gold, not the other two. Not very comfortable being long when both price and SL on recent highs and ML still down, but pressure too persistent to upside to stay on sidelines any longer so had to buy Thursday night; however, while usually prefer to go with Silver when these markets going up, in this case prefer to go only with gold time being, at least until get more solidly positive pattern. Bottom line - Can be long Gold with stops in 1170.00 area, preferably not entered until at least after midday. Lines say can be long Silver and this OK but slightly prefer going back to sidelines. Stops on any longs look OK in 18.40 - 45 area.
June Crude - Status - Neutral (to Bullish)/almost concurrent Observations - Decent up day Friday and this brings pattern to almost bullish/concurrent. Patterns in two products continue to be much more positive, as are charts and action. Have never kept records but feel products should lead crude since they represent more up to date demand picture. Not sure if problems in Gulf of Mexico having a psychologically positive impact on prices here, but regardless action good and patterns turning increasingly positive. Friday’s good up day gave upside chart breakouts in both products. Gasoline is already Bullish/concurrent to upside and Heating Oil should be after Monday. This complex always volatile but see good upside potential so see giving new longs in Crude and Gasoline decent chance as best. Bottom line - Can be long Crude and/or Gasoline (and Heating Oil if like). Stops always tough to place in these markets since they tend to move around a lot intra-day, but feel need to be generous for moment with 84.00 area and 2.3600 area (crude and gas respectively) OK for Monday, especially if see these levels anytime after midday or so.
July Corn - Status - Bullish/Neutral (indecisive). Observations - Third good up day in row for this market and this most positive action have seen here in long time. With COT so bullish for so long have to pay extra attention when get some solidly positive price action. Since one day “false” downside breakout four days ago this market has turned very positive and this gives that one day break below 3.60 look of potential significant bottom. Pattern still says sidelines but action so positive feel should go at least lightly long in anticipation of pattern turning legitimately positive soon. Bottom line- LInes say sidelines and this OK but once again prefer anticipation longs. Stops on these need to be a little generous for moment with little under 3.60 OK for now.
July Beans - Status - Bullish/almost concurrent to upside. Observations - Lines indecisive but with trend clearly up feel can still consider pattern positive. Since still see so much better upside potential than down prefer to continue to give benefit of doubt to long side here, but needs to keep pushing up since any down from here would turn pattern too neutral/short term negative to stick with longs. Pattern in Meal similar to that of Beans only more positive so case for longs here better, but like Beans needs to keep pushing up since any down of consequence would turn pattern too neutral to stay long. Pattern in Bean Oil still negative enough to fully justify being short, but as with other two in complex this one also needs to keep going (down in this case) to maintain negative pattern since would not take much up to turn it back to neutral. So no change in situations here and on Friday worked well since Beans and Meal up and Oil down, but probably best to use fairly close stops. Bottom line - Can be long Beans and/or Meal with stops in low 9.90 area 287.50 areas respectively (regular stops might be best or at least entered fairly soon after open Monday AM). Can be short Bean Oil with stops now probably OK in 39.30 area, with regular stops OK or at least entered fairly soon after Monday open.
July Wheat - Status - Neutral/crosscurrent. Observations - Decent up day on Friday and has now made back all lost on big down day Monday and this quite positive. Lines say sidelines but see so much upside potential see going back long as worth risk. Keep getting these big one day down moves that are the slowly but steadily regained and see this as positive action. A move, and especially close, above 5.10 would give chart quite positive look and this not far away. Bottom line - LInes say sidelines and this fine but if want to be aggressive see going long in anticipation as worth risk (stops would need to be a little under 4.90 for now).
July Cotton - Status - Neutral (to Bullish)/weak crosscurrent. Observations - Still see much more upside potential than down here and so want to be long. Pattern says sidelines at moment but will go back to bullish/concurrent if can hold next couple days or so, or especially if see any strength. Longer holds around unchanged or higher next day or so the better the case to go back long. Weekly charts are positive and supportive of much more up. Bottom line - Lines say sidelines and agree, but don’t see much wrong with anticipation longs and longer holds this area or higher the better the case for this.
Chick Goslin
