Commentaries on the market
Comments as of close Weds, 4/28/10
Trading Day by Day, copyright 2010
Comments as of close Weds, 4/28/10
This european debt business is making trading extremely difficult due to the big intra-day moves in both directions. If can handle the swings continue to see good downside potential in european currencies (and maybe Au and Ca$) and upside potential in US Dollar (and maybe yen). See good downside potential in stocks and upside in bonds/notes, but action in bonds/notes continues to be disappointing.
Negative relative strength in precious metals and sloppy line patterns enough for me to stick to sidelines in those markets, but on longer term basis longs still fine as long as prepared for some potential near term weakness.
As long as debt problems don’t cause a general market sell off see longs in beans, meal and cotton and still worth risk since upside potential good and patterns still positive.
When have a news event like this european debt crisis it tends to mess up normal price energy flows and this makes lines less reliable, but feel best to go with line patterns and weight momentum patterns (ML and SL) more and trend less at times like this since have to focus on short term indictors more when short term moves so big.
June S & P - Status - Neutral/crosscurrent. Observations -Moderate up day but not enough to change overall mixed picture (somewhat near term negative). Still see decent chance stock market has made some kind of significant top. Momentum line patterns are now solidly crosscurrent and SL’s making lower highs/lows. Would see a fairly quiet, unchanged to slightly higher day tomorrow as negative, but need to break below today’s lows, preferably on close basis, to give downside decent odds. So far still chance yesterday just another news related, against trend down spike, but doubt it since usually don’t get two in row so soon. On straight line basis sidelines best and difficult to argue with this, but see big downside potential if can get below 1175.00 area in S & P. Market up with VIX down so no next day signal there today, but VIX is up quite a bit past week and see this as negative sign. So, see downside odds and potential as better for at least short term, but on rule basis trend too positive to justify shorts. If want to be aggressive continue to see being/going short in this area as worth risk. Stops would need to be at least little above 1200.00, preferably not entered until after midday or so. NDX has been showing some relative weakness and this negative sign for all stocks. Bottom line - Lines say sidelines and this probably best, but still see some light anticipation, against trend shorts as worth risk.
June Bonds/Notes - Status - Bullish (to Neutral)/mildly concurrent. Observations - Quite negative day with closes on lows and close to or at suggested stop levels. Seems like this market needs big down in stocks to go up and as soon as stocks stop going down bonds/notes quickly sell off. Today a good example of why have not liked the action in these two markets recently since comes off highs very quickly and sharply and holds on or near lows most of day. Lines still positive enough to justify longs, but just barely after today’s down. If cannot move up next few days, and especially if see any more down, pattern will start to turn quite negative. “Should” go up but looks like will need more stock weakness and while still feel will see this, it’s tough to be in a market that is so dependent on another market. Bottom line - Lines still say can be long and agree, but tough when seems like only way trades works is if get financial disaster. Stops probably need to be fairly tight now with just under 117.00 in Notes and little above 117.00 in Bonds. Not sure when to enter them but little after tomorrow open OK.
June Euro - Status - Bearish/concurrent. Observations - Two sided, minor down day for the three european currencies. These markets still being driven by twists and turns of european debt crisis. I’m no expert on this but seems to me the debt is not going to go away and any extra funds provided to various nations probably will just push problem into future, not solve it. Very difficult to see Greece or any of the other nations in debt trouble really taking the necessary steps to solve problem (they just will not cut spending enough and no way to seriously increase revenues). Problem is these markets quite oversold and so any positive news can produce short but sharp rallies and these very difficult to hold through. Basis lines/rules shorts continue to be fully justified in all three of these markets and agree, but when so short term oversold will continue to have fairly high short term risk. See Pound as having little less upside risk. Bottom line - Can be short any/all three european currencies. Stop levels tough to place in situation like this since need to be fairly generous since short term volatility high but 133.00, 93.000 and 153.00 areas, especially on late in day/close basis look OK for tomorrow.
June Yen - Status - Neutral/crosscurrent. Observations - Big down day but did not change the overall neutral pattern. Basis line pattern still have small window of opportunity for upside, but this window will close if not up decently next couple days or so. Just too mixed to make good enough case for position in either direction at moment. If cannot move up decently next two, three days pattern will turn fairly solidly negative. Bottom line - Lines say sidelines and agree.
June Aus and Ca$ - Status - Neutral/Bullish (crosscurrent). Observations - Good up day in both but giving back some of that already in afternoon market. Trends are still solidly up but momentum line patterns are very mixed and so while did get minor crosscurrent buy in Au$ on close don’t see it as solid enough to go with. Continue to see decent signs trends here may be slowly turning over to downside, but would need quite a bit of sideways to down to do this. Still see short side as having better odds and potential, at least for near term, but being/going short here very aggressive and so sidelines probably best. Bottom line - Lines say sidelines in C$ and this probably best, but if want to be very aggressive some against trend shorts with stops a little above 99.50 OK. Lines very marginally say can go long Au$ and may be OK but prefer to pass on this. This one closed little too strong to justify any shorts so sidelines probably best, but if had to be in would still do so on short side (although move above 92.25 - 50 area would be much too strong to justify any against trend shorts.
June Gold and July Silver - Status - Gold - Bullish (to Neutral)/crosscurrent. Silver - Neutral (to Bullish)/crosscurrent. Observations - Negative strength continued today with Gold pushing little higher but silver and platinum did not follow. This negative relative strength quite extreme past few days and have to see it as downside warning sign for near term, although european debt problems may make this time different (saying is there is no more dangerous statement than this time is different since virtually never is). Gold now on sixth day of a crosscurrent buy signal and since these only last two to five days now pushing it on upside. Just cannot be/go long on this type of pattern at these price levels, but if european debt crisis continues or worsens will probably keep going up. Pattern in Silver back to Neutral and so see sidelines as still best there. Bottom line - Lines say can be long Gold and action so positive tough to argue with this but will stick to sidelines for at least another day. Lines say sidelines in Silver and continue to agree.
June Crude - Status - Neutral/crosscurrent. Observations - Decent upside reversal day but not enough to change overall very mixed/neutral pattern. No interest in short side here due both to up trend and always present event risk, but cannot make any legitimate case for longs basis lines so see sticking to sidelines as best. Bottom line - Lines say sidelines and agree.
July Corn - Status - Neutral/indecisive. Observations - Solid up day on some buying news from China, so a little of an news caused up move. Regardless, quick move back above 3.60 level gives yesterday’s move below that level look of potential false downside breakout and these can mark significant bottoms. Shorts did not work and failed very quickly and this always an upside warning sign. Overall picture too mixed to make good enough case for position in either direction. Bottom line -Lines say sidelines and have to agree.
May/July Beans - Status - Bullish/concurrent. Observations - Pattern still positive but is weakening a little now. Have had two and half day dip and when pattern positive this tends to be good time/place to initiate new longs, assuming situation still positive and should be. Fact corn quickly moved back above 3.60 level and closed there should be positive sign for all in group (except maybe oil). SL back to zero and so not overbought in any way any longer and getting a little short term oversold. Picture in Meal similar to Beans only little more positive and so same comments apply only little more so (bullish). Bean Oil pattern now Bearish/concurrent to downside and so shorts now fully justified. Have my doubts about downside potential of any in this group, but as rule should go with the “odd” one when it gets a legitimate signal and that’s case with being short Oil here. Should be able to keep stops fairly close in oil so not too much risk and could surprise on downside since pattern is clearly negative now. Bottom line - Can be, and still go, long Beans and/or Meal. Stops may need to be a little closer now with 9.85 and 285.00 areas looking OK, probably best not to enter stops until hour or so after tomorrow open. Can be short Bean Oil with stops probably OK a little above 39.50, but also would not enter until an hour or so after tomorrow open.
July Wheat - Status - Neutral/weak crosscurrent. Observations - Pattern close to turning a little negative but still have no interest in short side of this market. See sideways past two days as more positive than negative since no push lower after big down move Monday and longer holds sideways or higher next day or so the more positive would be. Higher close tomorrow will turn SL up and with COT so bullish for so long anytime SL turns up from recent lows could surprise on upside. Bottom line - Lines say sidelines and have to agree, but still want to be/go long.
July Cotton - Status - Bullish/mildly concurrent (but in position to strengthen). Observations - ML up cycle “temporarily” weakening a little, but “should” turn stronger over next few days, and will unless continue lower. Have now had two and half days down and when pattern positive, as still is, this tends to be good time/price to initiate new longs. Past week of sideways has look of bull flag, but close under 84.00 next day or so would give past week look of potential “island” top, although see this as unlikely. Still see longs as justified, but do not want to see much more down tomorrow since would turn pattern little more neutral than positive, although would need to keep pushing down to keep it neutral. Bottom line - Can be/go long with stops probably OK for tomorrow in 84.00 area, preferably not entered not until midday or so.
Chick Goslin
