Commentaries on the market
Comments as of close Thurs, 4/22/10
Trading Day by Day, copyright 2010
Comments as of close Thurs, 4/22/10
US dollar getting very strong and continue to believe have situation where strengthening dollar is negative for all world stock markets and economies due to this making already heavy debt burdens even more difficult to maintain (since all debt ultimately denominated in US dollar and strengthening dollar makes sustaining this debt ever more expensive and difficult). Will be very difficult to turn patterns in US dollar even back to neutral, much less negative, any time soon and so this could become an increasing background problem for upside of stocks and economies. However, so far stock market not having any problem overcoming this and may continue to do so. See this persistent and now increasing strength as a problem for upside of Crude and to lesser extent precious metals.
June S & P - Status - Bullish/Neutral (crosscurrent). Observations - Another very good come back after some fairly sharp overnight/early weakness. This market appears almost indestructible these days as always comes back from every dip, but no market is indestructible and overall line patterns are slowly turning less positive/more negative. Just cannot bring myself to buy these type of patterns but so far this has been best decision. If should ever get a solid down day “should” trigger decent dip, but so far cannot do this. Got another very weak next day down signal from VIX today (both VIX and Dow up slightly). Yesterday’s next day down worked for while, but not on close basis. Nothing negative from relative strength indicators though since Russell and NDX still stronger/more positive than Dow and S & P. Bottom line - Lines marginally say can be long all but Dow (back to neutral there), prefer to stick to sidelines.
June Bonds/Notes - Status - Bullish (to Neutral)/marginally concurrent. Observations - Moderately negative day on sell off triggered by stock market rally from early weakness. Looks like will need some persistent weakness in stocks before can get sustained up move in these two markets and beginning to wonder if this possible these days (persistent weakness in stocks). Regardless, basis lines and rules can still make decent case to be (and once again go) long either/both these markets. Up trends remain marginal but momentum line patterns still quite positive and COT remains very bullish and this good enough to stubbornly give longs at least little more chance. Bottom line - Can be/go long either/both with stops looking best back in 116 1/2 and 116 and 24/32 areas respectively, especially if see these levels after midday or so.
June Euro - Status - Bearish/concurrent. Observations - Normally should have seen at least a little up by now with this pattern but news out of Europe (Greece debt problems coming up again) has been too negative to allow any up. Had to short fairly quickly last night to get any kind of decent entry price on new shorts. Market down sharply already in after market and so now really short term oversold, but now also clearly bearish/concurrent to downside and when this happens can make legitimate case to initiate new shorts regardless of price level. Closed back on lows of past six weeks and where price has rallied from in past, but so far not this time. Doubt many will want to be long over weekend with action like this and news background so negative. When go down this much any rallies tend to be very short lived and somewhat limited since longs so stuck they will be selling into any up moves for while now. As rule does not pay to short when price and SL on such big dips, but exceptions tend to be when just going concurrent to downside. Difficult to suggest initiating new shorts here, but can make legitimate case to do so, just have to use fairly generous stops if do short here. Pattern in Swiss similar to that of Euro and so same comments apply. Pound pattern neutral but now in position to turn solidly negative on any down tomorrow since this would produce third lower high on SL at same time ML turning to what could/should be sustained down cycle, add in trend still being down and could be on verge of solidly negative pattern. Can use closer stops on Pound so risk for new shorts here in this market much less. Bottom line - Can be (and probably still go) short Euro (and Swiss), but stops need to be generous for moment with a little above 134.00 (and 93.50) on late in day/close basis OK for tomorrow. Lines say sidelines in Pound and this OK but now prefer anticipation shorts with stops OK in 154.00 area on late in day/close basis tomorrow.
June Yen - Status - Bearish (to Neutral)/crosscurrent. Observations - Moderately negative close after some decent overnight and early strength and this a little negative, but not overly so. On second day of this weak crosscurrent sell signal (and fourth day of this dip) and as rule this type of sell signal only lasts two to five days. Still see momentum line pattern as little too positive to be/go short in this area so prefer to stick to sidelines, and still would prefer longs to shorts if had to go in here, but so far this has been wrong preference. Usually Yen keeps up with US Dollar when it’s up against the other currencies, but this not case today since US Dollar very strong and this a negative sign for Yen but maybe Yen will do better tomorrow. Bottom line - Lines say can be short, prefer sidelines.
June Aus and Ca$ - Status - Bullish (to Neutral)/in between crosscurrent and concurrent, but needs to push higher or will go crosscurrent. Observations - action of past two days a little disappointing from bullish perspective but overall pattern still slightly positive. Continue to slightly prefer sidelines but some light longs OK if want to be little aggressive, although would not stay long if should close down much tomorrow since would bring patterns too close to turning neutral. These two have held up much better than other currencies past two days and especially today and this is a positive. Bottom line - Lines say can be long either/both and this OK, but would not stay long on lower close tomorrow (or if should trade much below 91.75 and 99.50 areas respectively.
June Gold/May Silver - Status - Bullish (to Neutral)/crosscurrent. Observations - Now on second day of a somewhat weak crosscurrent buy signal and these only tend to last two to five days. Both markets hit suggested stop areas but then rallied some, especially Silver. Did have positive relative strength today since Platinum strongest then Silver and this does add to short term upside odds. Have mixed feelings here since want to be long but ML’s now in solid down cycles and SL’s and prices went little farther down than like to see on recent dip, but do have rule that says any time get line pattern buy signal and trend clearly up, and this case here, should go at least lightly long. Prices keep having good sized intra day dips though so tough to use solid stops and pattern not positive enough to go with close only stops. See nothing wrong with light longs here for another day or so and could easily surprise on upside, but having difficulty getting very enthusiastic about long side of these markets at moment. Bottom line- Lines say can be/go long either/both these markets and see this as OK on light basis. Stops in area of today’s lows should be fine, and especially if see these levels after midday or so.
June Crude - Status - Bullish (to Neutral)/crosscurrent. Observations - Good upside reversal day with slight new recent lows made early but then rallied sharply. Have been down about five of past six Friday’s and so due for an up Friday. Turn up in SL does produce a weak crosscurrent buy signal and as rule anytime trend clearly up, as still case here, as rule should go at least lightly with any line pattern buy signal. Feel recent sell off has been too persistent and big to make good case to be/go long here, but as long as only looking for few day trade see light longs as OK. If upside good “should” not see price back under 83.00 so can use fairly tight stop so not too much risk and when trend up and price and SL turn up from good dip can always surprise on upside. Bottom line - Lines say can go lightly long and see this as OK. Stops little under 83.00 for tomorrow should be OK with regular stops probably OK as well so not too much risk.
July Corn - Status - Neutral (to Bullish)/weakly crosscurrent. Observations - Small up day but this enough to turn pattern back to neutral. Weak crosscurrent sell signal of few days ago did not work at all and this an upside warning sign. Still see this this one as least attractive for longs (other than Bean Oil), but trend only marginally down and momentum line pattern quite positive so see nothing wrong with some light anticipation longs. All need is close above 3.80 to turn trend positive enough to turn pattern legitimately positive and this not far now. Bottom line - Lines say sidelines and agree, but nothing wrong with some light anticipation longs.
May/July Beans - Status - Bullish/concurrent. Observations - No change here from past few days since overall picture remains clearly positive and continues to fully justify being long. SL turned up today and this another positive. All signs remains positive and continue to see good odds for good further good up move. Meal pattern remains even more positive than Beans and so case for longs remains solid there. Pattern in Bean Oil neutral to even little negative at moment, but no interest in shorts here despite this being weakest/least positive of group since doubt would pay to short when price and SL on recent extreme lows and trend marginally down to sideways. Bottom line - Can be long Beans and/or Meal with stops probably not necessary. Lines say sidelines in Bean Oil and agree.
July Wheat - Status - Bullish (to Neutral)/concurrent. Observations - Trend now slightly but legitimately up and so with momentum line pattern still positive continue to see being long as fully justified. SL turned up today and this makes pattern even more positive. As rule when have had extremely bullish COT situation for long time and trend finally turns up, as has now slightly down, have the best combination for good sized, sustained up move. Bottom line - Can be long with stops probably not necessary but can use 4.85 on late in day/close basis if feel need.
July Cotton - Status - Bullish/concurrent. Observations - No change here from yesterday with pattern still clearly positive and so continues to fully justify being long. Now have had day and half of down and so another day down and will be able to make good case to initiate new longs. Bottom line- Can be long with stops probably not necessary but can use 83.00 - 83.50 on late in day/close basis if feel need.
Chick Goslin
