Stocks..
Spu’s…1565 is the over run level I’m looking for to buy.
SPY…158.60 followed by 155.60
SDS…has to close Friday over 41.50 to show a good low has been put in.
Nikkei…12,500 held
DAX…8000 held
Bonds…
Bunds…143.75 is resistance and the upside closing pivot
FBTP….(Italian 10 yr.) 114.25-40 is resistance and the closing upside pivot
FX…
USD/JPY…93.70 ( 106.72 Futures) then 92.60 ( app 108 Futures)
AUD/JPY…8875 should bounce the first time down.
AUD/USD…is trying to bottom. 96.15 is resistance, sustained price action over 96.15 can lead to a test of 98.00.
EUR/AUD…stops are under 138.79. Electing these stops with no price recovery
back above the area will lead to a good sell off in this cross.
Commodities…
Oil..has to close over 96.20 for any upside to materialize
General Comments or Valuable Insight
Big mid-week shuffle with all the long term shorts getting rinsed in the Yen. This was a monster puke!
You have a potential double bottom in the Spu’s matching last weeks
Thursday low. This can lead to another rally to nowhere.
Time Frame trading today. Look for one distinct capital flow when Chicago opens into London’s close. Then wait and see how the things set up for the afternoon.
Bigger trades start setting up next week
Note…we always write a stop with any instrument we‘re interested in. As the instruments become profitable those stops should be raised to your entry level so you don’t lose money.
Short Term View…
Use the Chicago openings to help guide your trading.
Given the price action late last week in the Equity indices, short term breaks will find
willing buyers.
Trade the market on your terms and at the # sets. Don’t worry about missing a trade.
Medium Term View… qtrly update Published 4/1/13
Every qtr we reflect back upon our medium term outlook which
we generate the first of every new qtr.
This is our road map for the upcoming qtr. We put the pivots into our
market alert system and keep a dog eared copy on the desk in front of our screen.
Presented for your review is last qtr’s medium Term View with Macro Pivots. Their primary use is Risk management and general market bias.
This sheet keeps me pulling the trigger from the right side of the market at big macro pivots. A great example was 105.20 Yen (95 USD/JPY) early Friday just after the payrolls data.
These are static levels that do not change!
Once generated, they never go away. They become static technical levels.
Medium Term View… qtrly update
These are static levels that do not change
30 Yr. Bonds …Last qtr. 148.10 was our pivot. This qtr we’ll need closes above 145.10 to make an attempt at the 148.10 zone. Closing above this level would be short term positive the Bonds and negative the Equities. This qtr we’ll focus on 145.10 as our short term closing barometer. Long term, we will continue to favor the short side of the Bonds when market conditions allow.
Our strategy remains to sell the Bonds at these levels, with tight stops, until proven wrong.
The Spu/Bond spread has been running the show all year and we look for this correlation to hold over the near term.
When the markets trade “Risk Off” the Treasuries will be the vehicle of choice to receive 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.
BUND…145.00 +- 20 points will be pivotal all qtr. Use this level for tone on the DAX/BUND spread
Spu’s... Last qtr we used 1462, this qtr we will be using 1562 as our macro pivot. We’ve had a swing count, “Target”, for the past few months that comes in @ app 1590 +- a few. By maintaining higher on the qtr we expect to see that tgt hit. Then we’ll take a fresh look.
Nasd 100…2812 is our closing pivot.
DAX…8000 is our closing upside pivot.
Euro Stoxx 50…2700 is our upside closing pivot
Nikkei…remains bid over 12,500. It weakens under 12,260 close.
We need sustained and closing price action over the above levels for higher.
Gold & Silver…last qtr. the metals had bouts of selling driven by a shift to high yielding Equities, which we viewed as a side effect to a Risk On board. The only time the metals have caught a bid was when we witnessed a short term flight to safety via the selling of the continental currencies and the buying of Gold and Silver for safe haven related to European woes. As long as the Equity Indices remain bid, we don’t see much upside momentum in the precious metals, nor a pressing need to own them.
Gold needs to maintain above 1640 for higher. Sustained price action under 1530 can lead to a multi-year retrace.
Silver…we’ll be using 28.80 “close” for short term market tone.
The recent bull market that started in 2001 has been taking a rest for the past 2 years and we presently view this as a better technical trade than a long term buy and hold. In other words, take the money when you’ve made it. Initially ( short term), we think it’s more likely for this to surprise on the downside vs. a runaway move to the up.
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 105.70 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. No change. “Stuck in the middle with you”
USD/JPY…83.30 was our macro pivot. ( App 119.80 Futures) last qtr. This qtr we are using 95 USD/JPY ( app 105.30 Futures) to run the Yen crosses against the Commodity Currencies.
EUR/USD….“119.75” +- 100 pips….is the life of Euro 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.
129.60+ a few is our short term pivot for this qtr. Last qtr we were using 131.50 close as the level needed for a negative bias. This will now become our initial upside closing hurdle for higher.
EUR/AUD…121.59 becomes a key hold level.
EUR/JPY…115.50-116.60 is 1st macro retrace support.
AUD/JPY & CAD/JPY…should remain the Risk barometers they’ve been over the past several years.
Equity indices up = these crosses positive.
Natgas… The Infrastructure 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. 3.77 now becomes the key hold and pivot area for the next qtr.
Last qtr many of the infrastructure names were up over 40%. Look to reload on these with any substantive sell off in the Equity Indices.
Grains…Our long term strategy has been to buy 8-10% breaks in the ETF’s & ETN’s
Wheat…7.12 will serve as our macro pivot
Corn…closes over 7.40 will be needed for upside.
Soybeans…sustaining and closing over 14.65 will be needed for a move to over 15 dollars.
We’ll be patiently monitoring low risk areas for a Long opportunity over the next couple of months. Spring plantings are followed by weather driven markets in the Northern hemisphere late May into June.
Copper…343 is the qtrly pivot. Closing and maintaining below 330 will be needed to test of 295.
Oil…. When the market is Risk On the names here will provide a better trading venue for the average investor. We remain friendly to the Oil as long as it maintains above 92.50. Near term, closes over 100.50 are needed for higher. Closes below 89.50 will have us reevaluate the picture. Very long term we’re looking for an eventual attempt @ the 116 level.
General Outlook.
For the past couple years, the market has provided an equity check for the long term Bulls by attempting a break back towards the previous years close or lower. Last year it was precipitated by an unsettled Europe after 5/1/12, when we experienced market volatility with a 140 point S&P drop, which fell just shy of the 2011 close by a few points. We’ll be looking for similar price action again this year as the summer temperatures and passions heat up across the continent.
There should be plenty of opportunity over the next few months for the nimble trader. Pay particular attention to the DAX/BUND & SPU/BOND spreads for your intermediate trading.
As previously, stated we’re Long term Bearish bonds, however we will maintain tight risk parameters for any attempted shorts. When markets go Risk Off those dollars have to go somewhere, and that somewhere is still the treasury market.
Every instrument can be an island unto itself.
A prepared investor should have their sector shopping list ready when markets swoon.