Commentaries on the market
Comments as of close Mon, 4/26/10
Trading Day by Day, copyright 2010
Comments as of close Mon, 4/26/10
End of month and so will have monthly “fund drive.” If want me to continue to put out this daily letter then need to “donate” to the cause. Not sure about anyone else but doing this letter past two months has definitely helped my trading; however, too much work to continue to do it unless have decent “encouragement” from those reading it, i.e., you. So if you want to continue to read these comments you need to donate $50 (or more if comments have been particularly helpful) by either clicking on “donate” button next to the commentaries or sending a check to California Publishing, PO Box 2553, La Jolla, CA 92038 (if send check please note your e-mail address). $50 is one cent in grains or one point in mini S & P, a bad fill on a one contract order. i.e., essentially nothing in trading terms.
Disappointing day for long side of many markets today and enough to make me go to sidelines in all where was long and even those where patterns still clearly positive (beans, meal, cotton, precious metals and crude). See markets as unusually confusing at moment and so sidelines may be best across board, at least for day or so.
June S & P - Status - Bullish (to Neutral)/crosscurrent. Observations - Minor downside reversal day but nothing excessive. Now on fourth day of a weak crosscurrent buy signal and these only tend to last two to five days so pushing it now. Had some negative relative strength today since NDX weakest index all day, although Russell held up OK. If upside were really good here should have seen good up day today since lines positive and started out strong last night and early today, and so see today’s small down as little more negative than size of down indicates. Had another next day down signal from VIX today since Dow up marginally but VIX up decently (.85) when “should” have been unchanged to little down. Friday’s next day down signal worked a little today, but nothing great. See patterns as too marginally positive to be long, but up trends too strong to make any kind of legitimate case for shorts (although if had to go in here would do so on short side, at least for tomorrow). Bottom line - Lines marginally say can be long, prefer sidelines (or even some light against trend shorts).
June/Notes Bonds - Status - Neutral/Bullish (crosscurrent). Observations - Overall pattern little more neutral than positive, but still positive enough to make OK case for some longs. Believe will need some decent stock weakness to get anything decent on upside in interest rate markets, and small sign today may be on verge of getting some. Trends indecisive here but momentum line patterns still decently positive and so “should” see some up at least near term. Problem is action in these two markets past three days has been fairly negative. So see some light longs in either/both here as OK, but would not risk much and longer holds this area the less attractive longs will look. Bottom line - Lines in between longs and sidelines and either OK with slight preference for longs, but would not risk much (stops in area of today’s lows probably fine - 116.10 in Notes and 116.22 in Bonds, with regular stops maybe best).
June Euro - Status - Bearish (to Neutral)/mildly concurrent. Observations - Basis lines can make OK case for shorts, but SL turning up from recent lows and has not paid to be/go short lately when this case. Overall pattern negative and so if get decent price (anything high 1.3300 area and especially above 1.3400) some shorts fine, but so volatile and news related at moment prefer sidelines for another day or so. Swiss picture essentially same as Euro and so same comments apply. Pound pattern neutral/crosscurrent and so indicates sidelines and agree. Would view sideways, and especially lower, as more negative than positive tomorrow in all three european currencies. Bottom line - Lines say can be/go short Euro and/or Swiss and this fine but prefer sidelines for another day. Lines say sidelines in pound and agree.
June Yen - Status - Bearish (to Neutral)/crosscurrent. Observations - Unchanged day in price and this leaves line pattern unchanged as well - on fourth day now of crosscurrent sell signal and these only tend to last two to five days. Close to getting decent bullish divergence between price and SL since price on recent lows but SL still long way from its recent low. Basis line pattern “should” see at least some up near term, but weekly pattern increasingly negative and down trend solid and this probably what’s making rally so difficult. Too late in sell signal to go short here and so prefer to stick to sidelines, and if had shorted would be covering now. Bottom line - Lines say can be short, prefer sidelines (if short would take profits).
June Aus and Ca$ - Status - Neutral (to Bullish)/crosscurrent. Observations - Two sided, unchanged type day but both had some early strength and could have pushed decently higher but did not and see this as little negative. Still too mixed here to make good enough case for position in either market and so continue to see sidelines as best. Strong up trend and fairly positive weekly line patterns give bias to upside, but action not the best recently and line patterns neutral. Bottom line - Lines say sidelines and continue to agree.
June Gold/July Silver - Status - Bullish (to Neutral)/crosscurrent. Observations - Minor up day but highs made almost right after opening yesterday afternoon and closed near lows of day and this not good and especially when have current crosscurrent pattern. When have this type of pattern sideways always more negative than positive, and every day SL up sideways is more negative (since brings SL closer to turning down). Would take closes below 1135.00 and 17.85 tomorrow to turn SL’s in gold and silver respectively and these numbers still quite a bit down from here, but these levels will go up quite a bit after tomorrow. Really want to be long these two markets since weekly patterns so positive, but short term momentum line pattern is one that tends to be somewhat short-lived (usually only last two to five days and now on fourth day of these two crosscurrent buy signals). So reluctantly prefer to go to sidelines. Bottom line - Lines stills ay can be long either/both these markets and this still OK but now slightly prefer going to sidelines. If want to give longs more chance stops in low 1140.00 and low 18.00 areas look OK, at anytime tonight/tomorrow.
June Crude - Status - Bullish (to Neutral)/crosscurrent. Observations - Fairly big downside reversal day since up decently overnight and early but faded badly rest of day. See lack of up today as negative and so decent down quite negative. Still a ways from turning SL back down (would need to close below 82.70 tomorrow), but really did not like today’s action in crude and to lesser extent gasoline. Disappointing day from bullish perspective and reluctantly feel best to go to sidelines despite lines still being positive. This type of pattern need price to keep pushing up since if SL turns down next few days can produce fairly fast, good sized down move, i.e., longs a little too risky after today’s action. Bottom line - Lines still say can be long and this still OK with stops a little under 83.00, but now prefer sidelines (in all in complex).
July Corn - Status - Neutral (to Bearish)/crosscurrent. Observations - Rallied early but could not hold and closed on lows of day and back on lows of past few weeks. Price has now hit support level of 3.60 (and little lower) over ten times past month and this time may be one too many (to hold again). This one still weakest/most negative of group and so if should see group sell off much this one should be best bet for any shorts. Pattern still neutral but unless rallies next few days will turn bearish/concurrent to downside. Bottom line - Lines still say sidelines and this probably best, but can make OK case for some anticipation shorts with stops in 3.67 - 70 area (and longer price holds unchanged area tonight/tomorrow the better the case for this).
May/July Beans - Status - Bullish/concurrent. Observations - Minor down day but extreme weakness in corn on Friday and Wheat today have to be seen as downside warning sign for markets in this complex, at least for short term. With corn and wheat showing sudden weakness essentially only have a strong meal market left in this group since beans have been pulled up by meal, no help from oil. Really do not like taking profits here since overall pattern still so positive and have backing of bullish COT situation, but SL’s and prices still near recent extreme highs in both beans and meal and always have at least some short term downside vulnerability when this case. Exceptions to this tend to be when market in solid concurrent mode to upside which is case here. So basis lines can still fully justify being long beans and/or meal, but concerned about recent corn and wheat weakness since difficult for beans and meal to keep going up with those two pushing lower. Bottom line - Lines still fully justify being long beans and/or meal (without stops), but suddenly seeing little too much weakness in others in group so prefer to take profits in both and go to sidelines, at least temporarily. Lines say sidelines in Oil and agree.
July Wheat - Status - Neutral/crosscurrent. Observations - Big down day and while was vulnerable to some down since both price and SL were on recent highs and trend indecisive did not expect this much down. What was worse was midday when price got down to just under 4.95 dropped another twenty cents in a minute or less and this never a good sign, even though did make most of that back almost as quickly. Do have rule that says usually best to go to sidelines when both price and SL on recent highs and do not have BOTH trend and ML clearly up, only ML was clearly up since trend was indecisive. Chose to override this rule and paid for it, again. Continue to believe eventually will see big up in this market, but may not be quite ready. Bottom line- Lines say sidelines and have to agree after today.
July Cotton - Status - Bullish (concurrent). Observations - Moderate downside reversal day with new long term high made early and then closed on lows of day, but not down too much. Basis lines longs continue to be fully justified here, but am a little concerned about two things. First, not unusual to see a short term high made a few days after SL turns down from a recent extreme high and that might have happened today; and second, really did not like the extreme and very fast sell off in wheat today and while cotton does not follow grains that much it is influenced by that group and so see this as small downside warning sign (for this market). Basis line no reason to take profits but going to do so anyway since am little concerned about wheat action and small downside reversal in cotton, especially with both price and SL turning down a little from recent extreme highs. Lately has not paid to stick with longs when price and SL start to turn down from recent highs. Bottom line - Lines still clearly say can be long without stops, but prefer to be very conservative here by taking profits and going to sidelines temporarily. If want to give longs more chance, fully justified, stops “should” not be necessary but would not want to see close much below 84.00.
Chick Goslin
