GOOG… 633 ish +- 5 points needs to hold on a break. Most analysts will be watching 638-40 but
I want some leeway.
AAPL…495-505 is the area we’re going to BUY the Feb 550/575 call spread.
We’re going out to Feb. so we can hold the spread through the next earnings report if the market can find some footing.
Right Now that’s a big If!!
Spu’s…the Nov. options expire today on the close so the late day game should be interesting.
Dax…closing under 7000 will put this Index on the defensive in a big way.
Bunds..142.50 is the big macro pivot. Closing over 143.65 could lead to another leg up on this rally.
EFA…needs sustained price recovery over 52.25.
EWG…21.40-60 is the hold level here.
DAX/BUND…is very much in play at this level. This is the Teutonic version of the Spu/Bonds
Oil…Dec. Crude expires today.
General Comments…
Goog,AAPL, Nasd 100,Spu’s…The overall price action stinks!!, however they’re all in need of a rebound from these oversold areas.
This simply means that we think the board is set up to buy before you sell at these technical levels.
We’re not interested in selling weakness into these zones the first time down. Then we’ll see what the market gives us.
Just as markets can trade overbought for lengthy periods, the opposite is also true.
Match up your leading instruments and look for levels with synergy ( when they all line up)
Trading a Bear oversold market Requires Patience!!!
Lower lows can always provide fodder for a “Bear Trap” when the RSI’s are so low.
You saw this in AAPL when it went made a new low in the 530’s the first time down and rallied 20 dollars.
The Nasd 100 has led this entire move. Just remember that it has achieved our downside tgt.
Model Trading Portfolio……………..
Stop Close Profit Points
Long Nov. S&P 500 1400 calls
These will expire worthless so there is no need to do anything
Short Term View…
Short Term trend has been down in the Equity Indices…(Risk Off).
We’ll continue to look to fade Mid -Week Strength until proven wrong.
We’ve seen no price action evidence that this current trend is ending.
Medium Term View… updated qtrly
These are static levels that do not change.
30 Yr. Bonds …150.15 ish is our short term upside pivot. Closing above this level would be short term positive the Bonds and negative the Equities. Closes below 145.20 will be needed for another leg down in the Bonds. Short term we have held and we will continue to favor the short side of the Bonds when market conditions allow.
The Spu/Bond spread has been running the show all year.
When the markets trade Risk Off the Bonds will be the vehicle of choice to receive those outflows from the equities. Meaning, you have to be very patient with your sell levels in the Bonds. They can still get priced to very low yields with the help of investor sentiment and Fed meddling.
We will be monitoring the Bonds for a breakdown in the existing correlation. “Long Equities=Long Bonds” going into the fall. So far the Bonds have been a better indicator of Risk aversion.
Equities... last qtr had us looking for a trip to last years close (1250) and we came close. This qtr we’ll use 1462 close as our upside closing pivot.
Gold & Silver…the June lows now become extremely important support levels. Both metals have been used as the long side of the spread against Short Euro & Aussie. Investors have been buying Dollars and then purchasing Precious Metals with those dollars.
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. (This correlation is currently breaking down) We will be looking to short the Yen around 130.50 Futures, start looking under 77 USD/JPY for a potential Yen high.
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. Furthermore, only closes over 131.50 will be price positive.
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. 3.00 now becomes the key hold and pivot area for the next qtr.
Grains & Softs…Our long term strategy is to buy 8-10% breaks in the ETN & ETF’s.
Corn.. 7.55 is the macro pivot.
Soybeans…16.50 will be used for our macro closing pivot.
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 continue be a key level on the downside and $100 on the up. When the market is Risk On the names here will provide a better trading venue for the average investor.