Today, being Unemployment day, is typically about volatility in the 30 yr. Bonds and the Metals.
Precious metals….today is a day of extremes. A good high or low can trend for weeks.
Today we’re looking for a trad-able low. This will be a price action trade to see where the break can hold.
Gold…we’d like to see a retest of the 1674 channel break out to buy some of the yellow metal.
Anything into the mid 1660’s would be an ideal low risk scoop. 1653.40 is where the 200 and the 18 day Pit mvg avg’s intersect.
This is the biggest area on the charts. A close below would be price negative.
First things first…(Z) Gold has to run the 1687.60 stops to get there….
Equity Indices…I’m watching Brazil and Spain for opportunity.
EWZ…a close over 54.01 puts in an ORH week. A close over 54.25 will have us go long looking for a 10% rally.
EWP…we’ll be watching the price action here to see if this can hold a break. 24.92-25.00 would be a level of interest.
Bonds…it would be a sell around 150.17-24 basis (Z) on a spike off the # coupled with a Spu low in the teens.
148.16 (Z) can trap directional traders the first time down, just a level not to press direction.
TBT…a close today above 15.55, the weekly ORH # ,will have us looking for a test of the 16.70 high and higher.
EUR/GBP…7959 is the weekly ORH level. Maintaining above will keep the Euro firm, meaning you’ll be able to buy the breaks and get rewarded.
AUD/JPY…the 200 day is 81.85. A close over 82.15 is needed for an ORH week, signaling more Risk On.
9/6/12…
AUD/USD…103.17-38 is the first big match zone coming up, comprising a 30% retrace, unchanged on the month ( August close)
and the 200 day mvg avg. The next significant level, and a low risk sell zone the first time up for intermediate traders, is 103.72-90.
The Forward is a minus ten ticks to the (U) futures.
Upside
Gold…everybody is eyeballing the same 50% fib level around 1736 + a few. 1757 +- is where to look for price rejection the first time up and is the least risky sell zone for contra-trend traders.
Silver…33.65-87 followed by 35.10.
Euro…127.65 is 1/2 back on the year. 128.50 is the lowest risk sell level the first time up.
General Comments…
Copper, Aussie and the Equity indices are all approaching areas that can reject. This just means to be patient if your’re trading the #.
For some of our newer readers we’d like to just mention again that the Aussie has been historically a great Risk indicator.
We spend a lot of time pouring over the Aussie crosses for general hints of a Risk on or Risk off board.
Tuesday we spoke about the Aussie and it’s crosses being in a very oversold condition, meaning we were looking for a bounce.
Well, we got one hell of a bounce. Point being that sometimes it’s just as important to know what you don’t want to do.
You can always pass on a hand, the house will always have a dealer available.
Model Trading Portfolio
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Long XCO
Short Term View…Every Trade is the same trade. It’s either Risk On or Risk Off.
The Equity Indices are still around the March pivots.
We continue to favor singles stocks or instruments over the broader indices, then take the money and run.
The Grains and the Softs will provide the best trading opportunities over the near term. The weather should make these instruments the better trading venues. We will look to buy 8-10% breaks. Short term these commodities have run their course putting in interim highs. The grains need to digest before we get new signals.
Corn.. 7.55 is the macro pivot and a close below will lead to good profit taking.
Medium Term View…
30 Yr. Bonds …150.15 ish now becomes our macro pivot. Closing above this level would be short term positive the Bonds and negative the Equities. We will continue to look to sell good rallies for the foreseeable future.
The Spu/Bond spread has been running the show all year.
The Bonds have not had big reactions to the latest equity swings, which just tells us that the Spu’s have been the driving force on the spread. There is not a lot of demand for minimal yields even when the equities turn negative. Now it’s all about the Bonds!
We will be monitoring the Bonds for a breakdown in the existing correlation. “Long Equities=Long Bonds” going into the fall.
Equities... last qtr had us looking for a trip to last years close ( 1250) and we came close. This qtr should be a 2 way trading affair. When the board goes Risk on as it did 6/29/12 , look for high yielding beaten up names to provide greater returns with a lower risk profile than the indices. We will use 1333 as our level for bias.
Copper…Dr. Copper caught the recent low in the Equity indices. We’ll monitor the 360 level to possibly match up with another shorting opportunity in the Equity Indices.
Gold & Silver…the June lows now become extremely important support levels.
Currencies…
AUD/USD continues to be a good risk barometer. 102.25 ish is the near term macro pivot! ( This is a multi-year level) 111 is the upside pivot. Anything in between is just that, in between….no break outs! Closes above 105.30 would be deemed near term positive. In the big picture the Aussie has completed swing counts in both directions from the 111 high to the 95 level twice over the past 2 years.
USD/JPY…79.22 will be our macro pivot. ( App 126.40 Futures). Look for this level to run the Yen crosses against the Commodity Currencies. Use the crosses as the general risk tools they’ve been all year. CAD/JPY…AUD/JPY up, it’s Risk On.
EUR/USD….“119.75” +- 100 pips….is the macro pivot. Any price action the first time into this zone should be suspect ( possible Bear Trap), however closing a couple of days below this level is key to another big swing. This level has run several 20 cent swings in the Euro. It’s a significant area! These #’s are static and will not change.
Natgas…We will continue to strategically look to buy hard breaks. The names will continue to be our preferred way to play the Natty. For the average investor the names provide more liquidity and a user friendly venue for capturing Alpha.
Grains & Softs…the summer weather market is upon us. Our long term strategy is to buy 8-10% breaks in the ETN & ETF’s.
Oil…continues to be a good demand indicator, with failed rallies telegraphing little follow through in the Equity Indices. 78 which is the 50% Fib for the life of the Futures will be a key level. When the market is Risk On the names here will provide a better trading venue for the average investor.
