Commentaries on the market
Comments as of close Weds, 4/21/10
Trading Day by Day, copyright 2010
Comments as of close Weds, 4/21/10
Seeing some signs, and have “feeling,” that financial markets (stocks, bonds/notes, currencies, precious metals and crude) may be on verge of significant directional changes (i.e., stocks down, bonds/notes up, yen & US dollar up while other currencies down, precious metals down, crude down), but always difficult to “call” this type of thing and would only take day or two of opposite movement to make me change view on this. For some reason whenever see some very late weakness in stock futures (after cash closes) it can be at least a short term negative warning sign and saw this today and still seeing it a little in after market. Same thing happening in Yen which also view as upside warning sign there.
Continue to view grain patterns as positive, despite slight down trends in corn and wheat, and still see much more upside potential than down in all these markets (except maybe bean oil); however, do have option expiration on these markets this Friday and option sellers seem to have the ability to move markets so they pay off least amount possible and this may produce a little downside pressure next two days. Have seen this so many times in so many markets have come to conclusion option sellers either the luckiest traders in the world and they act in way to move markets in day or two before expirations (in direction where the sellers will profit and buyers will lose, which would be down in this instance since all but corn on good rallies). But once this out of way would expect upside pressure to resume, especially since commercials so heavily net long which “should” produce upside pressure as approach and go into May delivery month.
June S & P - Status - Bullish (to Neutral)/crosscurrent. Observations - Fairly quiet, unchanged type day but this enough to turn SL’s slightly up which creates weak crosscurrent buy signals; however, no interest at all in going with these and would not be surprised if they fail quickly. If these weak crosscurrent buy signals should fail quickly would view this as a definite downside warning sign. Had a minor next day down signal from VIX today since it was up about half a point while Dow up a little. Past few of these have not worked but have better feeling about this one. While lines (temporarily?) positive starting to see more negative signs in these markets than have in long time and would not be surprised if have made some decent tops here, and if should be down decently next day or so would tend to confirm this. Bottom line - lines marginally say can go long any/all of four stock indexes but see pattern as too shaky so prefer to pass on these.
June Bonds/Notes - Status - Bullish/concurrent. Observations -Good up day in both and especially the bonds. Have had marginally positive patterns here past few days and this now close to becoming more solid. Need to keep in mind that have had, and still have, very bullish COT situation in both these markets and with trend and momentum line pattern turning increasingly positive have the best combination for good sized, sustained up moves. Seems to me would have to have good down move in stocks to sustain an up move in bonds/notes and now starting to get some signs may be on verge of getting this (down in stocks). Holding some decent profits on longs here and this unusual situation for me in this market, but pictures positive and becoming more so and so feel should give longs decent chance. Bottom line - Can be (and still go) long either/both these markets. Stops now should be OK a little above 116 1/2 in Notes and now OK in 116.16 area in Bonds.
June Euro - Status - Neutral (to Bearish)/weakly crosscurrent. Observations -Small down day but under pressure all day and so action continues negative. Sell off of past five days has been much more persistent and bigger than I expected and this has turned me from looking for turn in trend to upside to looking for continuation of recent down trend. Would like to see at least a brief up turn in SL before trying short side but will need two or three days of sideways to up to get this and may not. Prefer not to short into this big a dip in both price and SL so will pass for another day, but longer holds unchanged or lower tomorrow the better the case to start shorting. Brief turn up in trend in Swiss looks like ending and if does this a definite negative sign. Pound has been the strongest of these three and too strong for shorts despite trend still being down, but momentum line pattern close to turning fairly negative so this against trend rally could be nearing an end. Not sure if rally in Pound due to upcoming election, but probably and this type of market influence rarely has lasting impact. Bottom line - Lines still say sidelines in all three here and continue to agree, but patterns close to going negative and so may have to short into dip (and longer holds unchanged or lower tomorrow the better the case to do this).
June Yen - Status - Neutral (to Bearish)/solidly crosscurrent. Observations - Minor upside reversal day and this an upside warning sign since ML on such solid up cycle and have had two good down days. When ML on this solid an up cycle don’t tend to get more than two, three down days in row before see some decent upside action. Despite solid down trend just don’t have any enthusiasm for short side of this market since momentum line pattern too positive and action of past two weeks just too positive. So prefer to continue to pass on this sell signal and if had to be in here would rather be long than short, despite solid down trend (market surprisingly strong in early after market and this another upside warning sign). Bottom line - Lines slightly say can be short but prefer sidelines.
June Aus and Ca$ - Status - Bullish (to Neutral)/mildly concurrent. Observations -Small downside reversal days in both and see this as fairly negative warning sign since pattern shaky. Basis lines light longs OK here but don’t have good feeling on being long these markets at moment with current pattern so prefer to stick to sidelines. Would take a couple of sideways or down days to turn SL’s back down, but if should get this would create quite negative short to intermediate pattern. Bottom line - Lines say can be long either/both and this may be OK but prefer to pass for while longer. Stops on any longs look OK in 91.50 - 75 and 99.25 areas, especially if see this anytime after midday.
June Gold/May Silver - Status - Bullish (to Neutral)/crosscurrent. Observations - Good up day and enough to turn SL’s up which creates a somewhat weak crosscurrent buy signal. Rule for this type of buy signal is they only tend to last two to five days and since already on two and half day up move would guess this signal will end up being closer to two day than five day. Platinum has made new highs and this a positive for gold/silver since plat tends to lead, but not sure if this enough to overcome solid down cycle. So, “should” be OK for another day or so on upside but not comfortable with longs here so prefer to keep positions on light side and would put any longs on some kind of probation. Bottom line - Can be lightly long either/both gold and/or silver but would tighten stops to 1135.00 - 40.00 and 17.75 - 80 area, and longer hold unchanged or lower tonight/tomorrow the better the case to take quick profits and go back to sidelines.
June Crude - Status - Neutral (to Bullish)/solidly crosscurrent. Observations - Unchanged day but see sideways as more negative than positive here since trend up and both price and SL on good dips to recent lows and so “should” be moving up and fact is not is a downside warning sign. However, can still make some case for “faith in trend” longs here due to low price/SL in good up trend. Due to solid up trend and low price/sl could surprise to upside at anytime but solid down cycle in ML too negative for me so prefer to stick to sidelines. Bottom line - Lines say sidelines and continue to agree.
July Corn - Status - Bearish (to Neutral)/crosscurrent. Observations - Pattern still marginally negative but on second day of a weak crosscurrent sell signal and so far this not working at all and this an upside warning sign. Unless down very sharply tomorrow the SL will turn back up and turn pattern back to neutral. Continue to have no interest in short side here since see so much more upside potential than down. Turn up in SL tomorrow would turn SL up for a third higher low and make momentum line pattern even more positive than currently is (ML on solid up cycle and SL making higher lows/highs). See longs in Beans and Meal, and to lesser extent Wheat, as better for longs, but if had to be/go in here would still do so on long side, not short (3.60 area fine if want to be/go long in anticipation here and don’t see anything wrong with this, just like the others better). Bottom line - Lines marginally say can be short, prefer sidelines (or light anticipation longs).
May/July Beans - Status - Bullish/concurrent. Observations - Pattern still clearly positive and so continues to fully justify being long. A little short term overbought but SL has come down past three days and this lessens downside risk. No idea why this market, and especially meal, so strong recently but “why” always the wrong question in this game, “what” is the correct question (what the price is doing and it is going up). With COT so bullish for so long and trend/momentum now clearly positive “should” have a good sized, sustained up move and this so should have lot more to go on upside. Meal pattern a little more positive than Beans and so same comments apply. Not an expert but as understand it when crush beans end up with about 80% meal and 20% Oil and so if have big demand for Meal, as must have now, then will end up producing too much Oil for the demand and this why a strong meal market can be negative for oil prices. Bottom line - Can be long either/both Beans and/or Meal with stops probably not necessary since when pattern this positive want to buy dips, not sell on stops. Lines say sidelines in Oil and agree, but close to going negative.
July Wheat - Status - Neutral (to Bullish)/crosscurrent. Observations - Trend marginally down but ML solidly up so market remains in crosscurrent mode. Momentum line pattern still nicely positive and SL should turn up tomorrow for a nice higher low. Trend still a little iffy but close to turning up and rest of picture positive enough to continue to justify being/going long in anticipation (of trend turning up soon). Bottom line - Lines still slightly say sidelines, but continue to prefer anticipation longs with stops OK in 4.85 area, preferably not entered until midday or later.
July Cotton - Status - Bullish (concurrent). Observations - Pattern remains clearly positive and so continues to fully justify being long. SL now near recent extreme highs and price closed on low of day and so could see a small dip, brief pause next two, three days, but if do should be a good opportunity to add to longs. Bottom line - Can be long with stops probably not necessary but can use 83.00 - 83.50 area on late in day/close only basis if feel need.
Chick Goslin
