Commentaries on the market
Comments as of close Mon, 4/19/10
Trading Day by Day, copyright 2010
Comments as of close Mon, 4/19/10
See today’s action as overall inconclusive in the various financial markets after Friday’s big down. but lack of any meaningful follow through to downside does add to case for Friday’s downs being against trend, news caused down spikes which rule says should be fairly quickly regained. However, if they are then this rule no longer in effect, meaning markets would then be clear to continue down.
Tough day in grains but continue to believe headed higher eventually and basis lines can still fully justify being/going long Beans and/or Meal.
June S & P - Status - Neutral (to Bullish)/weak crosscurrent. Observations - Small upside reversal today makes it look like Friday’s news caused, down spike will follow the rule and quickly regain those losses. Basic line situation now one of trend too strong for shorts, but rest of picture little too mixed/neutral for longs. Today’s up probably too much to go with any against trend shorts, especially with trend so strong, but remain skeptical of the upside here and will as long as this past week’s weekly downside reversal remains in effect. Hold here or move up any next two, three days though and pattern will turn back to positive. Bottom line - Lines say sidelines and agree.
June Bonds - Status - Neutral/Bullish (mildly concurrent to upside). Observations - Stocks reversed to upside so bonds/notes reversed to downside; however, overall picture here still mildly positive with only real negative fact a little short term overbought due to high price/SL. Trend a little indecisive also but is little more up than down. ML now on solid up cycle and when this case any down moves tend to be fairly limited in terms of time, i.e., only two, three days or so before see some decent upside again. Don’t have much enthusiasm for this market at moment, rarely do, but still see longs as better bet than shorts. Bottom line - Lines in between longs and sidelines, still slightly prefer longs with stops continuing to look OK in 116.32 area (Notes) and 116.00 area (bonds).
June Euro - Status - Neutral/crosscurrent. Observations - Trend marginally down but ML solidly up so market remains in crosscurrent mode. Still see pattern as fairly positive and continue to see decent signs this market (as well as Pound) slowly working at turning major trend up. A little too mixed/neutral here at moment to make good enough case for position in either direction though so sidelines in these two probably best, but if had to go in would do so on long side, not short. One wild card in mix though is the Iceland volcano situation since if that should continue bad or deteriorate could be quite negative for all of Europe, including their currencies. Swiss Franc on other had is legitimately bullish/concurrent to upside and on a two and half day dip and so can make legitimate case to be/go long that market. When these trend go up Pound and Euro tend to out perform Swiss, but just cannot make legitimate case to be/go long those two yet. Bottom line - LInes say sidelines in Euro and Pound and agree. Can be/go long Swiss with stops now probably OK in area of today’s lows (93.50) with regular stops may be best for moment.
June Yen - Status - Neutral/crosscurrent. Observations - Stocks stabilized and then firmed, so yen stalled and then sold off. Back to having lots of markets pivoting off what stocks do. As rule can always make at least some kind of case for shorts when trend clearly down and both price and SL on recent extreme highs, as is case here at moment; however, see recent rally as too strong and persistent and up cycle in ML as too powerful to do that in as big a mover as yen. So prefer sidelines for time being and still see odds as favoring upside despite clear down trend, although would not be surprised to see some more down next day or so. Bottom line - Lines say sidelines and agree.
June Aus and Ca$ - Status - Neutral/crosscurrent. Observations - Both cam back to unchanged after some additional overnight and early weakness, but nothing too impressive. Up trends quite solid here and anytime have both price and SL on recent extreme lows and trend clearly up can make some kind of case for some longs and that’s case here now, but see momentum line pattern as turning little too negative to do this at moment, especially with COT so bullish for so long. C$ has tendency to follow big moves in crude oil and that market has turned quite negative, at least on short term basis. Bottom line - Lines say sidelines and agree.
June Gold/May Silver - Status - Bullish (to Neutral)/very mildly concurrent. Observations - After some decent overnight weakness prices firmed some and closed near highs of day. On very strict basis patterns are still positive, but will not be after tomorrow. However, now have both price and SL near recent lows and so with trends solidly up can start to make case for some light anticipation longs. On weekly charts both markets are decently Bullish/concurrent to upside and this a solid background positive and “should” limit any downside action, both on time and distance basis. Despite big negative COT position by commercials in both these markets continue to see upside potential as better than down. So tough call but don’t see too much wrong with some longs again here, but with lines going to neutral after tomorrow probably best to keep these on light side. Did get a little positive relative strength today since Plat and Silver did little better on upside than Gold and the persistent negative relative strength recently was a downside warning sign before big sell off Friday. Bottom line - Lines still marginally say can be long (although will not after tomorrow, unless up very sharply) and see this as OK again, but on light basis. Stops probably OK in area of last night’s lows (although would not enter these until at least hour or so after “pit” open tomorrow.
June Crude - Status - Neutral/crosscurrent. Observations - Two very big down days in a row when trend and line pattern positive and this never a good sign for near to intermediate term. Price held at up trending ten week moving average line and trend still decently up so could always surprise to upside, but doubt it due to size of past two day sell off and now quite negative momentum line pattern. Close back under 84.00 in June crude has left two weeks of trading as an “island” up above and this can mark significant tops. Never have any interest in short side of this market due to always present extreme upside event risk and would not go short here anyway due to clear up trend, and since cannot make good enough case for longs will stick to sidelines. Bottom line - Lines say sidelines and agree.
July Corn - Status - Bearish/crosscurrent. Observations - Very big down day and size of down definitely caught me by surprise. Ignored my rule that does not pay to be/go long when trend up and both price and SL on recent extreme highs, although believe did mention it. This a good rule and should always keep it in mind as over time tends to work well. Just got caught up in possibility the volcano might produce some surprising strength, instead of surprising weakness. This still a possibility but would need to see quite a big more from both current volcano and nearby presently dormant one for this to be case, which is a possibility but market will not react unless turns to reality (which naturally hope does not). Regardless and in spite of today’s big down continue to believe this market, and others in group, in process of bottoming and turning up. Have felt Corn was least attractive for long side and continue to feel this. Today’s down did turn pattern back to negative and produced a weak crosscurrent sell signal, but will pass on this. Bottom line - Lines now say can go short, prefer to pass (too weak now for any against trend, anticipation longs).
May/July Beans - Status - Bullish/concurrent. Observations - Extreme weakness in corn and wheat pulled beans down today as well, but they held (barely) at support levels and did firm late and continuing in after market. Some down not surprising since market a little short term overbought, but would not want to see too much more. As rule when in bullish/concurrent mode to upside and get one to two and half day dip it tends to be good buying opportunity and have this here now. Meal held surprisingly well all day in face of extreme weakness in rest of group and this quite positive sign for that market. Old theory in trading is that if all but one in a group of markets that tend to move together make big move in one direction, should bet the “odd one out” (meal today) to go the other way, i.e., this says should have been buying Meal today. Had a nicely positive pattern in Oil recently but failed very badly today and this not good sign; however, despite today’s down picture still a little positive. Suggested stop point hit on Oil so cannot recommend longs anymore, but just cannot suggest shorts either. Bottom line - Can be/go long Beans and/or Meal. Stops OK a little under today’s lows in Beans and about 900 points down from today’s close in Meal (would go with July for any new trades in both). Lines now say sidelines in Oil and have to agree.
July Wheat - Status - Neutral/crosscurrent. Observations - While some down would not have been surprising today since market was short term overbought (high price/SL) really did not expect to see down as big as saw today. While this a blow to bullish case do not see it as destroying it. ML remains in solid up cycle and SL still on series of higher lows/highs. Don’t like to predict but will not be surprised if this turns out to be “final” downside push before finally turn trend up and get persistent upside pressure but little difficult to stick with longs when down this much in one day and trend still down. If should hold here for couple days will take another look at long side, but for now sidelines probably best. Bottom line - Lines say sidelines and once again have to agree.
July Cotton - Status - Bullish (to Neutral)/mildly concurrent. Observations - Cotton held up well today in face of extreme weakness in grains and see this as positive sign. Unchanged close did turn pattern mildly positive and so back to signaling longs here. Want to be long this market and can make slight but legitimate case to do so after today; however, SL is on a single low and has been up for a week now and this means pattern just marginally positive. So tough at moment but see some light longs as OK as long as prepared to ride through some short term weakness, if get this. Always like to see SL at least briefly pause/dip in situations like this but markets don’t always cooperate. Bottom line - Lines say can go lightly long and see this as OK. Stops probably have to be generous for moment (in 80.00 area basis July and on late in day/close basis).
Chick Goslin
