Commentaries on the market
Comments as of close Mon, 5/3/10
Trading Day by Day, copyright 2010
Comments as of close Mon, 5/3/10
Back to about as unsure of all these markets as ever tend to get. Only really clear pattern at moment is short side of yen and mistakenly passed on that one. Commodities in general starting to act weak even when patterns positive and this not good sign for upside of any markets other than interest rate markets since may show weakening economy. Don’t follow it in letter but copper has been very weak recently and showing clear signs of trend change to downside. Same now case in lumber and both these markets are reasonable indicators of economy. Add in sudden weakness in cotton, which is also a little bit of economy type market, and have negative economic signs.
Just not much confidence in anything at moment and when this case have found best to be pretty much on sidelines, including taking profits even where patterns still positive (as is case in crude complex).
June S & P - Status - Bullish (to Neutral)/crosscurrent. Observations - Decent up day but not enough to change overall fairly mixed picture. On second day of a weak crosscurrent buy signal and these only tend to last two to five days. However, still have clear down cycle in ML and still set up for a third lower high in SL and if get this would be clear negative. This market just never quits on upside since very time has good down day seems like very next day makes it back, or almost. However, continue to see signs market may be making significant top and did not see enough upside today to change this, yet. Bottom line - Lines say can be long and so far this OK but prefer sidelines, or even against trend shorts (although this very aggressive and has very poor record, i.e., going short against trend in stocks).
June Bonds/Notes - Status - Bullish (to Neutral)/mildly concurrent. Observations - Moderate down day but not enough to turn patterns back to neutral, yet. Sense a lot of skepticism of upside potential of these markets and personally feel the same, but price does keep chopping higher and pattern is still positive, also have to keep in mind have long standing very bullish COT situation which is solid support when pattern positive. Have felt uncomfortable with longs here for entire up move and still do, but will give light longs another day. Bonds doing better on upside for some reason. From force of old habit tend to favor trading bonds over notes and bonds do tend to lead notes. Both overbought since both prices and SL’s on or near recent highs so cannot argue much if prefer sidelines. Bottom line - Lines still say can be long either/both with bonds little better. Stops probably still OK in 117 1/4 to little higher in Notes and 118 or little lower in Bonds.
June Euro - Status - Neutral/Bearish(weak crosscurrent). Observations - Decent down day but not enough to prevent patterns in all three european currencies from turning essentially neutral. Europe closed today for May day holiday and so may not have had as much reaction to weekend Greece news as should have. Difficult to tell whether the actions the EU has taken (huge low interest loan, i.e., or “gift”) will stabilize currency, at least temporarily. Personally cannot see this problem ever being fixed on any kind of long term basis, but all currencies having problems these days. If had to be/go in any of these three markets would have to do so on short side, but with all three so volatile these days and patterns so marginally negative see too much risk so prefer to just stick to sidelines for while longer and if miss some on downside so be it. Bottom line- Lines in between sidelines and shorts in Euro and Swiss and while shorts little better prefer to stick to sidelines. Lines say sidelines in Pound and agree.
June Yen - Status - Bearish/concurrent. Observations - Decent down day and so pattern remains negative and continues to justify shorts. So far missing down move here since passed on shorting Friday and last night. Short side “should” be good here since pattern clearly negative, but just don’t have good feeling on any of the currencies (or most other markets) at moment and these markets can be so volatile prefer to be safe on sidelines than short for now. Bottom line - Lines say can be short with stops now probably OK in 106.60 to 107.00 area, especially if see this late in day or on close. This fine but passed on shorting higher and not confident enough in trade to short here on lows so will stick to sidelines.
June Aus and Ca$ - Status - Neutral (to Bullish)/crosscurrent. Observations - Mixed pattern and sloppy action continued in these two today and so still have poor situation for trades in either direction. These two markets have look and feel of heading for turn down in trend since action has turned too weak past couple weeks. Find it strange C$ has been so weak recently with crude complex so strong since does tend to be correlation between these two markets. Overall just too mixed in these two at moment for trade in either direction, but becoming increasingly negative on both. Bottom line - Lines say sidelines in both and agree.
June Gold - Status - Neutral (to Bullish)/crosscurrent. July Silver - Status - Bullish (to Neutral)/crosscurrent. Observations - Even though gold market made new recent highs SL turned down slightly and this turns pattern at least temporarily back to neutral. Pattern in silver though is still slightly positive. Have rule that says when both price and SL on recent extreme highs and do not have BOTH trend and ML clearly up usually best to take profits and go to sidelines and this rule does apply here. Had mixed signals in terms of relative strength today since Silver stronger than Gold but Platinum quite a bit weaker than both. Platinum now in position to give fairly negative indications from momentum line pattern since ML on down cycle and SL will turn down from a third lower high after tomorrow unless up decently. Missed some of recent up move but finally did get long a couple of days ago. Already out of Silver since did not like negative relative strength and now reluctantly feel need to get out of gold as well. Sometimes when get in late on a move will make a point of trying to get out early and this may be best here. Gold stocks have been leading futures past few days but today opposite was case since gold stocks mostly down all day and on close while futures mostly up all day and on close. So want to be long this group but once again seeing a few too many downside warning sign so prefer to take quick profits and go back to sidelines. Bottom line - Lines say sidelines now in gold and agree. Lines still say can be long Silver but prefer to stick to sidelines.
June Crude - Status - Bullish (to Neutral). Observations - Pattern marginally positive but in position for this to strengthen over next few days or so. If commodities in general were not turning weak would be more willing to give longs here plenty of chance on upside, but in current weak environment prefer to be more cautious, especially since losing some upside momentum and market up quite a bit in past four days. Not sure why crude so much weaker than the two products past few days since bought crude and gasoline at same time the other night and on today’s close longs in crude up only $500 (on big contract) while longs in gasoline (and heating oil) up little more than $2,500 a contract. Plus gasoline has easily made new long term highs while crude still 150 points from doing same. So, basis lines can still justify being long any/all in this complex with the products still much more positive, but just don’t like recent weak action in commodities and so prefer to take profits and go to sidelines. May miss some additional good upside action but have taken some losses recently and whenever do this like to take at least some profits to offset this. Bottom line - lines say can be long any/all in complex and this OK but prefer to be safe and take profits on any/all longs.
July Corn - Status - Neutral (crosscurrent). Observations - Pattern still neutral but SL and price on slight recent highs and always have downside vulnerability when this case. Beans tend to lead this group and with beans now weak see upside potential in any grain as lessening by day. Want to be long all in this group but have to be realistic and pattern here, and in others in group, just not very positive any longer. Bottom line - Lines say sidelines and once again have to agree.
May/July Beans - Status - Neutral (to Bullish)/crosscurrent. Observations - Weak day and enough to hit suggested stop area both intra-day and on close. Another disappointing commodity on upside since had very positive situation here until few days ago. Close under 9.80, which is close now, would leave two plus weeks of action above this level and give it look of small “island” which would be quite negative on chart. Meal pattern still marginally positive but action too negative to stick with longs any longer. Slight turn up in SL in Bean Oil produces minor bullish divergence, but pattern still negative so prefer to give shorts there little more chance. Bottom line - Lines now say sidelines in Beans and after today have to agree. Lines still marginally say can be long Meal but suggested stop level hit so prefer sidelines now. Can still be short Bean Oil but would tighten stops to 39.25 area or little higher, with regular stops maybe best.
July Wheat - Status - Neutral/indecisive. Observations - Continue to have quite mixed pattern here and with weakness in beans upside odds looking worse by day. Want to be long this market and tried again today, but pattern a little too mixed and so prefer to be safe and go back to sidelines. Continue to feel this market will eventually have a big up move due to long standing very bullish COT situation, but upside just not looking very good in most commodities at moment so will wait for something more positive here. Bottom line - Lines say sidelines and once again agree.
July Cotton - Status - Neutral (to Bullish)/crosscurrent. Observations - Pattern says sidelines and have to agree after weak close today. Really felt had good sized up move coming in this market but action of past few days making me doubt this more and more. Any higher tomorrow will turn SL up and give a fairly weak buy signal, but now not sure if want to go with this if should get it. Bottom line - Lines say sidelines and agree for now.
Chick Goslin
