Commentaries on the market
Comments as of close Weds, 4/7/10
Have some nicely positive patterns in Crude, Gold/Silver, Aus and Ca$ and Cotton and so see any dips in these markets as good opportunities to add to longs. See good upside potential in all of them, possibly very good. While patterns in Euro and Swiss currently negative just do not trust these patterns enough to be/go short so prefer to pass. Pound looking more and more like has made some kind of significant bottom. Grains also may finally have made significant bottoms. Stocks too mixed for me at moment. Bonds “should” be a short but not my best market. Yen also “should” be a short, but US dollar looking shakier by day and so being short Yen may not work out.
Had wrong date on yesterday’s abbreviated letter, do that from time to time and was rushed yesterday. Focus so much on markets tend to get lost on what day of week it is and especially what day of month. Regardless, continue to believe could be headed for multi month periods of weak dollar/strong commodities and have always found this best environment for most individual traders, at least tends to be case for me and most I know.
June S & P - Status - Bullish (crosscurrent). Observations - Finally had a decent down day in stocks, but only in the Dow and S & P and so had positive relative strength day as well which indicates nothing serious coming on downside. Pattern here now just marginally positive and since have preferred sidelines recently when pattern little more positive continue to prefer sidelines. Just can’t get enthusiastic about upside of this market but then have an ingrained downside bias toward stocks. Overall picture a little too mixed/neutral for me to be buyer here on longer term highs so will stick to sidelines, but doubt have much downside potential here. Bottom line - LInes marginally say can be long and this OK but still prefer sidelines.
June Bonds - Status - Bearish (mildly concurrent). Observations -Solid up day but may have been just a reaction to stock weakness. This market operates on a logic level that has always escaped me since just cannot see logic in loaning US govt money for 30 years at 4% when deficits what they are and view that dollar will inevitably go lower due to govt policies. Based on line rules today’s good up “should” be an opportunity to initiate new shorts. Since this a lousy market for me will stick with token shorts, but can make legitimate case to initiate new shorts in this area. Bottom line - Lines say can be/go short with stops probably OK a little over 116.00, but preferably not entered until at least after midday tomorrow (stops on any shorts in June Notes probably OK in 116 8/32 area on same basis).
June Euro - Status - Bearish (mildly concurrent). Observations - Pattern back to negative but feel this will be just temporary. However, anytime have all three lines down, as case here now, odds will favor more downside. Prefer to pass on shorts here at moment though since see pattern as potentially too positive. If hold this area or higher next few days will get close to having a quite positive momentum line pattern since could have ML on solid up cycle and could get a good bullish divergence, but this looking ahead and too far ahead to act on yet. So if have to be in here at moment only case basis lines is for shorts, but will pass. Something seems to have changed in Pound recently as has now turned quite positive in terms of action since had great chances to sell off decently past few days and has not and this good upside warning sign. Trend quite negative but other than that see some decent positives in that market (ML close to going into good up cycle, SL close to putting in third higher low, and COT very bullish). If had to be in pound here would be long, not short. Seeing decent signs US dollar may be making significant top. Bottom line - Lines say can be short Euro and/or Swiss, prefer sidelines. Lines say sidelines in Pound and this may be best, but if want to be aggressive see some against trend longs as OK with stops in 151.00 area on close basis.
June Yen - Status - Bearish/Neutral (mildly concurrent). Observations - Second decent up day in row and this one a little more worrisome from bearish viewpoint. Today’s up turned pattern more mixed than negative and so now should put any shorts on some kind of probation (down or out tomorrow). Usually after this extended and big a down move can fairly safely sell into first two day rally and this is case here now. If downside still good, and should be, then should not see much more up. Bottom line - LInes say can be/go short and agree, but now should put any shorts on fairly tight leash (meaning should be able to use stops in 107.50 - 75 area, but would not enter these until about midday tomorrow).
June Aus and Ca$ - Status - Bullish (concurrent). Observations - Mixed day with Au$ steady but Ca $ down decently. As rule does not pay to be/go long when both price and SL on recent highs and do not have both trend and ML clearly up (at moment trends nicely up but ML’s just slightly up). However, recent up move in both these markets has been good sized and quite persistent and when this happens, and pattern clearly positive, any dip, even just one day, tends to be good buying opportunity (and that’s what have in C$ after today’s down). C$ hitting up against big round number of 1.00 and normal to back off from this type of psychological barrier once or twice before breaking through. Bottom line - Can be long either/both. Can initiate new longs in C$. Stops tough to place since still want to be buyer on dips, not seller on stops, but if feel need to use stops see about 100 points or so down from today’s closes should be OK, preferably on late in day/close basis.
June Gold/May Silver - Status - Bullish (concurrent). Observations - Second day in row of negative relative strength but pattern so positive prices keep pushing higher. Believe line patterns, chart and price movement more important than relative strength and so with lines clearly positive do not see negative relative strength as sufficient reason to take profits on any longs. Still see significant upside potential in these markets, and possibly a lot higher and for quite a while. Had hoped for little down today to add to longs but market did not cooperate, may have to pay up to add to longs but will wait another day or so due to negative relative strength. Bottom line - Can be long either/both. Still don’t see any need for stops since still want to buy dips, not sell on stops.
May Crude - Status - Bullish (concurrent). Observations - First down day in a while and this “should” create a buying opportunity. As rule when in clear bullish/concurrent mode any one to two and half day dip tends to be good opportunity to initiate new longs, and that’s case now. No way to know how low this dip will go, but doubt will see much more down, if any. So continue to see being long here as fully justified and now can make decent case to add to longs in this area or on any further dip tonight/tomorrow (may want to go with June for any new longs). Bottom line- Can be/go long in this area. Stops probably not necessary since still want to buy dip, not sell on stops, but if feel need can use 83.00 area on late in day/close basis for fail safe stop.
May Corn, Beans and Wheat - Status - Neutral (crosscurrent). Observations - Mentioned yesterday saw signs of potential major bottom in these markets and these signs much stronger after today. Patterns now neutral/crosscurrent and close to turning trend up in beans. Still cannot make any kind of legitimate case to be/go long, but if should get two, three days of sideways or little down from here will be able to make some case for longs. Still see the potential in these markets as being to upside, not down. Have seen bearish stocks reports create bottoms in past and this may have happened again on recent report. Bottom line - LInes say sidelines and agree, but longs tempting again with Wheat and Beans for this better at moment than Corn.
May Cotton - Status - Bullish (concurrent). Observations - Decent down day but pattern still positive. Have been mentioning that felt needed one more dip or at least pause in SL and price before this market had a really solidly bullish pattern and now may have that. Could dip more since this just one down day, but overall picture quite positive and so doubt have any significant downside risk. Would view sideways or even small down as more positive than negative, so longer holds around unchanged tonight/tomorrow the better the case to initiate new longs. Pattern might turn temporarily neutral/crosscurrent if hold this area for another few days, but even if does should go quickly back to positive. Bottom line - Can be long. Can make decent case to initiate new longs. Stops probably not necessary but can use 79.00 area on late in day/close basis if feel need.
Chick Goslin
