Commentaries on the market
Comments as of close Tues, 3/30/10
When I was doing the daily market letter a few years ago there were a couple of aspects of it that I really did not like. The major one was the “business” part of it, the keeping track of who was subscribing, who had canceled, etc., and then (especially) doing the monthly billing. So this time am going to try a different approach. Am going to try this on a voluntary pay basis. Will continue to provide daily (almost, may skip a day once in while) letter, but will ask anyone who finds it of value to pay at least $50 (or more if feel worth it) at end of each month. Very soon will post letter to web site only (tradingdaybyday.com) rather than send it out by e-mail (has taken longer to set this up than anticipated and not quite there yet). If go to tradingdaybyday.com and look at top of page will see “commentaries.” There will find recent letters and on right a “button” for “donations” at PayPal. If want me to continue putting out letter and feel the previous month’s letter has provided value you can click there and “donate” by credit card. If prefer can send check, money order or cash to California Publishing at PO Box 2553, La Jolla, CA 92038. Card will be billed to California Publishing.
Since will be posting letter in open for anyone to see, those who want to free ride will be able to do so, but this is a very tough business and feel if the letter provides clear value most will pay/donate, and of course would be bad karma not to compensate for value. If I don’t get enough “payers” then will stop putting it out, no problem. However, doing this letter does help me to organize my thoughts on the various markets I cover and trade and so is definitely a help for me to do it (I would rather pay $50 and get it than write it). Problem is I’m naturally lazy and have found will just do not do this in the necessary detail unless am actually putting out a formal letter. So will try this approach for while and see how works out . Feel free to pass this web site address on to any other traders you know and talk to.
Markets looking encouraging past few days, on upside, and see decent signs may be going into some good sized, sustained up moves. But will have to take it day by day since been tough to sustain up moves recently, or down moves for that matter.
June S & P - Status - Bullish/crosscurrent. Observations - Unchanged day but this enough to turn pattern slightly positive and give a weak crosscurrent buy signal. As rule when trend clearly up, as is here, “should” go with any line pattern buy signal, even a weak one. The possible exception here is fact have major monthly employment report coming Friday AM and this can move price so much prefer to stick to sidelines than go into report with position. Bottom line - Lines slightly say can go long with stops OK in 1164.00 area. See this as OK for day or two but prefer to pass for now due to major report on Friday.
June Bonds/Notes - Status - Bearish/concurrent. Observations - Trend just slightly down but momentum line pattern still clearly negative and so lines continue to justify being/going short in this area. Past three days taking on look of bear flag which should lead to lower prices. Do have major employment report on Friday AM and this can move interest rate markets sharply so have to decide next day or two whether want to take short positions into report. Momentum line pattern solidly negative and this best argument for shorts; however, do have some potential positives and these are a potentially quite positive weekly line pattern, COT data still quite bullish (but has been for many months and not much impact, so far) and “fact” I tend to do poorly in this market and am currently bearish. Bottom line - Lines say can be/go short and continue to agree. Stops still look OK in 116.16 area or little higher, preferably not entered until after midday tomorrow (116 3/4 in June Notes looks OK on same basis).
June Euro - Status - Bearish/concurrent. Observations - Trend and momentum line pattern remain clearly negative and so shorts remain justified. As rule when pattern bearish/concurrent and get two days plus on upside tend to see some decent downside pressure and that’s what happened here last night/today. If downside good from here, and not sure on this, then “should” continue lower and “should” not see return to last night’s highs. So would view any decent up from here as clear upside warning sign. On chart a move, and especially close, back above 136.00 would give chart look of potential major bottom. So would view sideways next day or two as more positive than negative and longer holds unchanged or higher tonight/tomorrow the better the case to take profits and go to sidelines. From bearish perspective am little concerned about strength of past three day rally in Pound. Pound has put in moderate bullish divergence between price and SL and ML not quite able to get into clear down cycle either and see these as upside warning signs. Bottom line - Lines still say can be short and continue to agree, but getting a little shaky on this so would either/both tighten stops to 149.75 area on regular basis, and longer holds unchanged or higher tonight/tomorrow the better the case to take profits. Swiss and Pound both neutral/crosscurrent at moment so prefer sidelines in both those (would cover any shorts in Pound or use quite close stops (151.00 on regular basis).
June Yen - Status - Bearish/concurrent. Observations - Trend only slightly down so far but down trend steadily strengthening and so with momentum line pattern still solidly negative continue to see being short as fully justified. See shorts in Yen as better than any of other currencies at moment. SL and price still on low side so market remains a little short term oversold, but sideways, slightly lower past three days has lessened this. Many months ago read that a poll of about 25 big time economists showed that virtually all felt that on a fundamental basis (various factors) the Yen was the most overvalued currency. Bottom line - Lines say can be short Yen and continue to agree. Stops still need to be on generous side with 109.50 or little higher looking OK, not entered at least until after midday.
June Aus and Ca$ - Status - Bullish/crosscurrent. Observations - On second day now of a somewhat weak crosscurrent buy signal and these only tend to last two to five days. Up trend quite good though and action of past two days good as well so see giving any longs here at least another day or so. Probably a little too late to initiate new longs and nothing too wrong with taking quick profits, but “should” be Ok for at least another day or so, and maybe longer. Bottom line - Lines say can be long either/both with stops probably OK in 97.50 - 97.75 in Ca$ and 90.25 - 50 in Au$ and since this crosscurrent buy signals regular stops probably OK/best.
June Gold/May Silver - Status - Neutral/crosscurrent. Observations - Trends sideways but close to turning slightly up. Momentum line patterns also neutral, but even closer to turning at least somewhat positive and not too far from going nicely positive. Feel these two markets have had their chances to do something serious on downside past week or so and fact failed badly remains a clear upside warning sign. Weekly line patterns have been and remain on negative side, but there also both could go very nicely positive within week or two. So prefer not to consider short side and if want to be a little aggressive see enough real and potential positives to justify starting to go long in anticipation of lines turning clearly positive. Continue to see much more upside potential than down in both these markets. Bottom line - Lines still say sidelines in both and this OK but now prefer to start going long either/both in anticipation of lines turning positive soon. Want to buy on scale basis (over time and to lesser extent price) next two three days so would want to add on small to moderate dips next couple days, but if need should be able to use 1095.00 area and 17.00 area as fail safe type stops for any anticipation longs.
May Crude - Status - Bullish/crosscurrent. Observations - Pattern marginally positive but see overall picture as good enough for at least light longs in this area. Friday a holiday and so have three day weekend coming. Have been down three pre-weekend days in row and so doubt very much will be down this Thursday. Not sure if it’s potential Israeli bombing of Iran or just basic supply/demand that keeps pushing this market right back up every time it sells off, but regardless this is what has been happening and this tends to be upside warning sign. Would like to see a brief pause/sideways move in SL to create some kind of higher lower there to solidify positive pattern, but longer hold this general area next few days the more positive picture will become, and see at least holding with three day weekend ahead as likely. Bottom line - Can be/go long with stops still looking OK in 81.00 area, preferably on late in day/close basis.
May Corn - Status - Bearish/marginally concurrent. Observations - Lines still negative enough to indicate shorts, but negative pattern close to going neutral and will on any up next day or two. This one weakest/most negative of group and so best for any shorts and worst for any longs. Have missed decent down here past week or so but continue to see so much more upside potential that down prefer to stick to sidelines, and if had to be in here for next week or longer would be long, not short, despite lines. Bottom line - Lines still say can be short but continue to prefer sidelines.
May Beans - Status - Bullish/concurrent. Observations - Trend now legitimately slightly up and in position to strengthen. Momentum line nicely positive now as well and so market now in mild concurrent mode to upside and in position for this to strengthen. Beans remain clearly most positive of group and so remains best bet for any longs. Continue to be very bullish on this market and basis action of today and past two days picture increasingly positive. Meal still best of complex and so longs fully justified there as well, but Oil close to becoming quite positive as well and when/if this happens would expect Beans to be best. My rule for best combination for good sized, sustained up move is when have had a very bullish COT situation for many months while market in down trend and then have trend and momentum pattern turn positive. This has now happened in Beans and Meal and close to happening in Bean Oil. Future always unknown but see odds have started a good sized, sustained up move in Beans and Meal, and soon in Bean Oil, as quite good. Bottom line - Can be/go long Beans and/or Meal. LInes say sidelines in Oil and continue to agree, but longer holds this area or higher next few days the better the case for longs there as well. Stops should be OK in 9.55 area and low 270.00’s respectively, preferably on late in day/close basis (want to give these trades good chance to work).
May Wheat - Status - Neutral/crosscurrent. Observations - Good up day turned pattern back to neutral today. COT data so bullish here continue to see upside potential as much better than down. Due to down trend cannot make any legitimate case for longs yet, but if had to be in here now would definitely be long, not short. So if want to be aggressive see some light anticipation longs as OK again, but longs in beans and meal probably still better. Bottom line - Lines say sidelines and this OK, but see some light against trend, anticipation longs as OK if want to be aggressive (stops in low 4.60’s on late in day/close only basis should be OK for now.
May Cotton - Status - Neutral/crosscurrent. Observations - Lines still say sidelines but now very close to going at least slightly positive, and if should get decent up could go fairly clearly positive quickly. Had a huge three week up move here and then a little three week choppy, sideways. This sideways has clear look of big bull flag which should eventually lead to solidly higher prices, eventually. Mentioned yesterday that as rule does not pay to be/go short when trend clearly up and both price and SL on recent extreme lows, which means usually pays to do this. Trend solidly up and both price and SL on recent extreme lows. See so much more upside potential here than down feel should go with any decent excuse to go long, especially with price now quite attractive. Bottom line - Lines still say sidelines and this OK but now prefer anticipation longs. Stops should be OK in 79.00 area or little lower, preferably on late in day/close basis.
Chick Goslin
