Commentaries on the market
Comments as of close Fri, 4/9/10
Trading Day by Day, copyright 2010
Comments as of close Fri, 4/9/10
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Trend changes are always most difficult time to trade since just cannot know for while whether actually getting a trend change or just a false sign. Good example of this was Beans week and half ago when trend almost turned up but negative report killed it. Now have grains looking like on verge of trend changes to upside again. See the weekly line patterns of these markets as on verge of becoming very positive and so see chances of trend changes working this time as much better. Have had very bullish COT situations in these markets for long time and so if can turn trends up would have what I consider best combinations for good sized, sustained up moves. Always safer to wait for actual trend change before buying, but see enough positives to justify taking some risks and anticipating trend changes to upside now in Beans and Wheat, and can already make fully legitimate case to be/go long Bean Oil.
Have similar situations on long side of the three european currencies. Trends in all three currently down, but these are weakening rapidly and would not take much more upside to turn trends up in all three. And same as with grains have had quite bullish COT situation in Euro and Pound for long time, and very bearish situation in dollar index, and so if should turn trends then should get good sized, sustained moves in directions of new trends.
So just a question of whether want to play the potential trend changes in these markets or wait for trends to actually turn before acting. Personally prefer to anticipate these trend changes since see enough good signs in momentum line patterns to take risk. Have always found if can get in for at least some contracts before trend changes then will be in good position to add to these early positions and this puts you in position for a very good trade.
June S & P - Status - Neutral (to Bullish)/mildly crosscurrent. Observations - Trend solidly up but ML still slightly down so market in mild crosscurrent mode, but any more up on Monday and will turn Bullish/concurrent to upside. Continue to have somewhat sloppy pattern here, but price pressure still clearly up. Have had lots of reasons for this market to sell off at least some recently, but all dips brief and limited, so far. For some reason just cannot get behind long side here and as result have missed good up, but at least, with couple brief exceptions, have stayed away from short side. Will stick to sidelines while longer, but if had to be in would have to be long, not short. Bottom line - Lines say sidelines and agree, but odds favor upside.
June Bonds - Status - Bearish (to Neutral)/very mildly concurrent to downside. Observations - Overall picture here still slightly negative and so continues to justify shorts, but need to see some decent downside very soon or will go to neutral. From logic view, at least my logic, seems like this market way overpriced (long term interest rates way too low) and so want to give shorts decent chance, but my logic has never been very good in this market and pattern close to indicating sidelines best. Bottom line - Lines marginally say can be short and continue to agree, but would not risk much from current levels so see stops a little over 116.00 (on regular basis) as probably best.
June Euro - Status - Bearish (to Neutral)/marginally concurrent. Observations - Good up day on Friday and evidently up in pre-market this afternoon (Sunday). Always an upside warning sign when have negative pattern and market goes up instead of down and that’s case here at moment. Was very skeptical of this sell signal and felt it would be short lived and so far seems to be case. Pattern currently negative but could turn positive fairly easily since only need close above 136.00 to bring trend within margin of error to consider up; ML down at moment but any up or even sideways next few days and will turn up and be in position for sustained up cycle; and, price and SL close to putting in good bullish divergence. Trend changes always tough to call but see number of signs in process of turning trends in the three european currencies (euro, swiss, pound) from down to up. So prefer to continue to pass on shorts here and if want to be aggressive see enough potential positives to continue to be against trend long Pound and now also to go long Euro in anticipation of trend change. COT data has been very bullish on Euro and Pound for long time and so if do turn trends up would have good chance for sustained up move. Bottom line - Lines still say can be short Euro, continue to prefer to pass on this and now see enough positives to go against trend long Euro and stick with any against trend longs in Pound. See Swiss as least attractive for any longs, and prefer to pass on any shorts there.
June Yen - Status - Neutral (to Bearish)/indecisive. Observations - Pattern here now more neutral than negative and so have to put any shorts on fairly strict probation (down or out today - Sunday - and tomorrow). This currency still looks weakest/most negative of group, but while “should” go down pattern not particularly negative and on weekly chart quite oversold. So see this one as very tough call here and when this case prefer not to risk much. Bottom line - LInes say sidelines but still see enough negatives to give any shorts a little more chance (i.e., stops in 107.50 to 75 area, with regular stops now probably best).
June Aus and Ca$ - Status - Bullish (to Neutral)/mildly concurrent. Observations - Patterns only slightly positive at moment, but in position to strengthen and will if can get just little upside next day or so. Au$ doing a little better at moment, but this seems to switch back and forth on regular basis. Past four days of choppy, sideways in C$ has look of bull flag. Also C$ has stalled just below big round number of 1.00 and this normal and usually leads to clear break through to higher levels. Not the most solidly positive of pictures but still good enough to give longs more chance, although would keep stops reasonably close. Bottom line - Can be long either/both with stops looking OK just under 99.00 in C$ and 91.75 - 92.00 area in Au$ (may be best to use regular stops now).
June Gold/May Silver - Status - Bullish/concurrent. Observations - Solid up day for all three precious metals on Friday and this came while markets short term overbought which is always good positive sign. Still short term overbought, but as rule when in clear concurrent mode to upside can overlook this. COT data showed fairly heavy switch to short side by commercials in past reporting week, but this after two weeks of opposite action so should not be problem. The heavy net short position in these markets by commercials is only real “negative” at moment, but rule is should ignore this when patterns positive and that still clearly case. See good signs US dollar index may have topped out and headed for solid down trend and if that is case should be a solid positive for precious metals. Have mentioned several times recently that if precious metals can do as well as they have on upside while dollar was strong, they should do really well when/if dollar turns weak. Bottom line - Can be long either/both gold and/or silver. Still see stops as probably not necessary since patterns so positive continue to want to buy more on next dip, not sell on stops.
May Crude - Status - Bullish/concurrent. Observations - Another down day for crude on day before weekend and believe this now four of past five times this has happened. Used to almost always see crude up before weekends due to potential event risk, but not case anymore, for whatever reason. Pattern still clearly positive and so want to give longs more chance; however, while would take good sized down day to change positive picture would not want to see another down day Monday since would begin to be little too much downside pressure when pattern this positive so may be best to tighten stop level some. Bottom line - Can be long with stops now probably best in 84.00 area basis May, but would not enter these until after midday or so Monday. (84.75 area basis June contract).
May Corn - Status - Neutral (weak crosscurrent). Observations - Overall pattern still on negative side, but if can hold here or especially move up any next few days pattern will start to become fairly positive for short to intermediate term. Still no interest in short side here and if see some stability next few days may be able to make some case for against trend longs. HOwever, still see this one as least potentially positive of group and so least attractive for any against trend longs. Bottom line - Lines say sidelines, continue to agree.
May Beans - Status - Neutral/Bullish (crosscurrent). Observations - Trend has now turned marginally up in this market and in position for this to strengthen as move ahead. Still see much more upside potential in this market than down so want to be/go long. Can make minor case for longs now, but momentum line pattern not very attractive for this at moment. So tough call here since see big upside potential and trend turning up but reluctant to be/go long with current momentum pattern. If prepared to add on moderate dip over next few days to week see being/going lightly long here as fine, but if not then probably best to wait for better pattern. Meal pattern even less attractive for longs so see sidelines there as best. Bean Oil pattern remains bullish/concurrent and so can fully justify at least light longs there. SL a little on high side in Oil so vulnerable to some short term weakness, but two, three days of sideways to little lower in oil would set up very positive pattern for new longs. Bottom line - Lines say sidelines in Beans and agree, but if want to be aggressive can start to build long position. Lines say sidelines in Meal and agree. Can be/go long Bean Oil. Prefer to go without stops on any longs here since want to buy near term weakness, not sell on stops.
May Wheat - Status - Neutral/crosscurrent. Observations - While trend still down here it is beginning to weaken, and momentum line pattern looking potentially very positive. The COT data remains extremely bullish here (and also still quite bullish on Corn and Beans) and this will eventually lead to good sized, sustained up move. Rule is should wait for trend change to act on this, but believe a positive momentum line pattern, especially a solid up cycle in ML, is good enough when COT this positive. So prefer to continue to pass on any short signals and once again see enough positives to take chance on some against trend longs. Longer holds unchanged area or higher tonight/tomorrow the better the case for some against trend longs. Believe will see at least a 5K pre contract up move in this market fairly soon and see this as worth taking some risk on against trend longs here. Bottom line - LInes say sidelines and this OK but now see some against trend longs as worth risk. Prefer to risk going without stops for moment since want to buy any moderate weakness next few days.
May Cotton - Status - Neutral/crosscurrent. Observations - Pattern here has deteriorated considerably past couple days and this means will take longer than had expected to turn it positive again. Still believe upside potential much better than down, but pattern just too short term negative now to be/go long at moment. Bottom line - LInes say sidelines and have to agree for at least while longer.
Chick Goslin
