Commentaries on the market
Comments as of close Mon, 4/12/10
Trading Day by Day, copyright 2010
Comments as of close Mon, 4/12/10
Going to opening day for San Diego Padres baseball so putting out comments early today without seeing new charts. If see anything when get back home will add some additional comments later, but all of sudden patterns shaky on almost every market (except precious metals as still clearly positive there).
Disappointing day since started out so well yesterday afternoon on Euro zone support for Greece. Never a good sign when bullish news fails to produce lasting up move and so far that case. Always have to be careful of news created moves, and especially when come against any kind of trend. Currency patterns now virtually all on mixed side and so sidelines may be best in all of them, but still prefer some anticipation longs in Pound and now Euro (or shorts in dollar index).
Patterns still very positive in precious metals so prefer to give longs there more chance and get another sideways to even moderate down day and would buy more. Crude getting shaky for long side though so need to see some up there soon or will have to give up on longs.
Still see very good upside potential in Beans and Wheat and so want to give any longs there, both legitimate in beans and oil and anticipation in Wheat, more chance.
June S & P - Status - Bullish (to Neutral)/weak crosscurrent. Observations - Very quite, sideways day and not a good sign when get this quietly sideways on long term highs. However, enough to turn SL back up and this turns pattern back to slightly positive. Anytime trend this clear to upside as rule should go with virtually any line pattern buy signal and see no big problem with this but personally prefer to pass than finally come in here on longs after sitting on sidelines for so long. VIX down decently (.58) for such a sideways day and normally would view this as positive sign for next day, but VIX now down to lowest level in year and half (or longer) and this shows surprising amount of complacency and so may not be positive sign at all. Bottom line - Lines marginally say can go long with stops probably OK in 1185.00 area, especially if see this after midday or so. This may be OK but will pass.
June Bonds - Status - Neutral/Bearish (indecisive). Observations - Decent upside reversal day and up enough to hit suggested stop levels. Pattern still very, very marginally negative but not by enough to stick with any shorts. This market has had very good chance to break down decisively past few days to week and not only has not but has instead moved to slight new highs for past two weeks and this an upside warning sign. Never understand the logic of this market and rarely do well in it (and so rarely trade it and when do only very lightly), but for whatever reason does not want to go down at moment. Have to keep in mind that COT data is extremely bullish and has been for long time and while this has not produced any upside so far, in the past it has tended to eventually do so. See this reluctance to go down here as potential bearish sign for stocks. Want to be short but just too firm so have to go to sidelines at least temporarily. Bottom line - Lines essentially in between short and sidelines, have to prefer sidelines now.
June Euro - Status - Neutral (to Bullish)/crosscurrent. Observations - Gapped up big last night on Euro zone bail out of Greece (offering big low interest loan), but all the upside energy expended early and on weak side rest of session, although did close up decently. Trend now more sideways than anything else, but closer by day to turning up (at moment need a close above 138.00 to turn it officially up, although close above 137.00 would be good enough). Momentum line pattern now decently positive since ML turning up and in position for sustained up cycle and have put in good bullish divergence between price and SL. COT remains very bullish and has been for long time and rule is when this case and trend finally turns up it tends to result in good sized, sustained up move, but this not operative until trend “officially” turns up. So tough call since can make decent case for some anticipation longs here but always risky to anticipate trends in any market and especially currencies. See enough positives to justify some anticipation longs, but this is little aggressive. (Or shorts in dollar index). Price 100 points down from early high and so is a little bit of a dip. See Euro as better than Swiss at moment and should continue to be if upside now the right side, so prefer sidelines in Swiss. Trend farther away from turning up in Pound and action neutral to little negative there today, but if long from lower would give them more chance since momentum line pattern positive there as well. Bottom line - Lines say sidelines in all three european currencies and this fine, but still slightly prefer some light anticipation longs in Pound and now Euro as well. Stops very tough to place since would not want to sell on moderate dips tomorrow or next day but move, and especially closes, under 135.00 and 152.50 respectively would be little too negative to safely stay long with trends still technically down.
June Yen - Status - Neutral (to Bearish)/crosscurrent. Observations - Quiet day but needed to be down to keep pattern negative enough to fully justify shorts. HIt suggested stop area right after open yesterday and since suggested regular stops have to consider stops hit. Still see overall picture as more negative than positive due to down trend, but momentum line pattern and recent firm action not very encouraging for shorts any longer. Past five days of up to sideways has look of bear flag but longer go without clear downside pressure the less likely this the case. Close call and can still make minor case for shorts with tight stops (107. 70 area, just above today’s highs), but little too shaky so now slightly prefer sidelines. Bottom line - Lines say sidelines and reluctantly have to agree.
June Aus and Ca$ - Status - Neutral (to Bullish)/indecisive. Observations - Pattern in C$ now neutral/crosscurrent while pattern in Au$ still slightly Bullish/concurrent, but action today much more negative in Au$ than C$. Up trends in both still quite good and momentum line patterns still in position to turn nicely positive soon, but recent action not very positive and COT data very bearish (but rule is can/should ignore that when trends up). Tough call here since “feel” a little negative toward these two markets after today, and past few days in C$. Currencies as whole have turned very mixed now and this makes positions riskier. If European currencies turning up, and decent signs this case, the recent strength in these two may end for a while. Can still make slight case to give any longs here more chance but prefer to be safe than sorry and so prefer to go to sidelines. Bottom line - Lines say sidelines in C$ and now agree. Lines slightly still say can be long Au$ but action quite negative today so prefer sidelines there as well.
June Gold/May Silver - Status - Bullish/concurrent. Observations - Downside reversal day for both markets and while this never good sign when long it also rarely produces much continuation to downside. Once counted fifteen plus “key reversals” like this in a good up trending market. When this type of day does not produce a meaningful top it tends to get lost in chart when make solid new highs, but on the occasional day it ends up being a meaningful top it stands out on chart for long time. This why so many put extra weight on these “key reversals.” My general rule is can/should ignore high price/SL when market in solid concurrent mode to upside and that case here at moment, but lately it has not paid to stick with positions for long when prices/SL’s reach recent extremes. Regardless, patterns here positive enough that really doubt will see much in way of downside near term, although could have another day or two of downside pressure. Rule is when in solid Bullish/concurrent mode and then get one to two and half days down tends to be good time to initiate new longs. Now have had one day down. Prefer to wait for at least another day before adding new longs. Have been waiting over week for dip to add to light long position and so hope waiting another day not mistake but will do so anyway. Bottom line - Can be long. Can make case to initiate new longs on another day or so down, but will wait for another day. Stops tough to place since still want to buy this dip, not sell on stops but would see 1130.00 area and 1780.00 area, especially on close, as little too much to downside.
May Crude - Status - Bullish/Neutral (indecisive). Observations - Another small down day but this now four down days in row and past two days failures to maintain some good early strength and this not good sign for upside. Have been reading a lot of comments in general press about possibility of seeing $100 plus oil again and this also never good sign for upside. Came close but suggested stop areas not quite hit. However, feel “should” have seen at least one good up day by now and fact down four days in row when pattern this positive tends to be downside warning sign. Up trend fairly solid so reluctant to give up on longs, but this dip going on little too long and down little too far for comfort. So like with others above this one now very tough call since want to stick with longs but don’t like recent action (feels “heavy” all of a sudden). COT very bearish here and has been for long time and while can/should ignore this when trend up, when action suddenly turns negative have to give it more weight. With pattern now more neutral feel should either have tight stops in or put any longs on fairly strict probation. Bottom line - LInes now in between longs and sidelines, marginally prefer longs but would put them on strict probation (up or out tonight/tomorrow) or use stops little under today’s lows (little under 84.00 in May, little under 84.90 in June).
May Corn - Status - Bearish (to Neutral). Observations - Slight down in SL today produces a weak concurrent sell signal. Still see this one as weakest/most negative of group and as rule any time trend this negative should go with any line pattern sell signal, but see too many potential positives in lines so prefer to stick to sidelines here, and if can hold or move up any next few days will create fairly positive pattern (but this may be over anticipating a little). If want to try some shorts should be able to use fairly close stops (3.54 area) so not too much risk, but will pass. Bottom line - Lines say can go short with stops in 3.54 area, prefer to pass.
May Beans - Status - Bullish (to Neutral)/crosscurrent. Observations - Decent up day with pressure fairly good to upside all day. Continue to feel the potential in this market, and other grains, is much better for upside. Not the most positive of line patterns but trend is now slightly but “officially” up and when trends turns up in market where COT has been very bullish for long time (case here) then odds and upside potential tends to be quite good. Pattern not positive enough for me to be fully long, but good enough for light longs as long as prepared to hold through any short term dip and then add when pattern more positive. Whenever I go into one of bean products (meal or oil) as rule always go with beans as well since have long history of always being in the wrong product and that was case today. Bean Oil pattern still better for longs than Meal, but SL a little high on OIl so day or two down not too surprising and not overly negative (actually just makes new longs there better for placing). Rule is when clearly bullish/concurrent and get one to two and half days down tends to be good entry point for new longs and now have one down day in Oil so any more down tomorrow, next day “should” be good buying opportunity. Bottom line - Can be lightly long Beans with no stops (since want to add on next dip, not sell on stops). Lines say sidelines in Meal and agree. Can be/go long Bean Oil with stops under 39.00 on late in day/close basis.
May Wheat - Status - Bearish/crosscurrent. Observations - Slight turn down in SL today produces a weak crosscurrent sell signal, but since see upside as the side with the potential prefer to pass on this. Actually prefer to use this dip of past few days as opportunity to go long in anticipation of pattern turning positive soon. May be over anticipating here but with COT so bullish for so long and ML in position for sustained up cycle (if can get by next few days without any big down) and SL now having made higher high see too many potential positives to be short and enough to be/go long in anticipation. Bottom line - Lines marginally say can go short, prefer to pass and instead start to go long in anticipation.
May Cotton - Status - Neutral/crosscurrent. Observations - Unchanged day but up decently early and could not hold and this negative sign, especially when already quite short term oversold. Pattern too mixed to be in either direction at moment, but action of past week quite negative. Situation here at moment one of trend too positive for shorts, but rest of picture too negative for longs. Difficult for me to believe big up of several weeks ago will turn out to be a false up move and not lead to more good upside action, but anything possible in this game and recent action as well as current line pattern not encouraging for upside. Bottom line - Lines say sidelines and have to continue to agree.
Chick Goslin
