Spu’s...Mid Oct was the last time we saw these levels in the index. 1288-89 was the old high with 2408 in the Nasd. We were looking to get out of our longs around the 1319-25 level on that swing, which failed to materialize. With price action above 1288-89 we could see that level.
AUD/USD…103.80-104 is an important area. All new closing strength over this level is needed to confirm more Risk On across the board.
Gold…Platinum…Copper are on my radar today. Platinum looks the better of the two. Maintaining and closing over 1438, Platinum leaves the potential for an outside reversal week to the upside. Copper needs closes above 354 for this same pattern.
Oil…105.31 seems to be the # this market would like to retest. It’s a technical level on the monthly charts we broke from, Good closes over this level creates a very bullish scenario.
Short term Stock traders should be focusing on the big Oil names like CVX for day trading opportunities. The better price action has been in the energy, grain,and technology names.
Admittedly, I’ve missed this swing up since the end of December. We will take a look a little later to see if there is a low risk way to play for some Alpha.
Those that bought in mid Dec. are comfortable Longs. It’s rarely a good idea to chase a move you’ve missed.
Model Trading Portfolio…Current Holdings
No positions
Medium Term View…
The 1160-70 SPU’s area “S&P 500 Futures” would provide an area for good risk reward for the Bulls early in the qtr. The first time down has the potential to be a great Bear trap.
We’ll be using 1220 ish for our new pivot area going into the first qtr. We’re looking to buy the hard breaks in the equities and sell the 30 Yr. Bonds when the opportunity presents itself early in the 1st qtr.
It is our view that the political and economic risks are still skewed to a largely cash portfolio over the medium term.
This upcoming Quarter will be one of patiently waiting for strategic opportunities. In other words, another year of limiting your downside risk and taking your money on your winners. Only trade ,either Long or short, when you can codify your risk.
We don’t believe the market volatility is going away anytime soon. This year should shape up to be another Trader’s Market. We’re particularly focused on opportunity in individual Commodities as well as the Commodity currencies in the first Qtr. It’s all about trade location!
30 Yr. Bonds …147 is the all time high in the front month futures. We will watch price action off this level for any potential surrogate moves in the Currencies or Stock Indices. 144.20 ish now becomes our macro pivot. All new closing strength over 145.20 would have us looking for more upside in the Bonds. Closing above this level would be short term positive the Bonds and negative the Equities.
Australian Dollar ( AUD/USD)…100-100.30 is the cash level we are using to match up with general Risk On bias in the overall market. Closing below this level, should mirror short term weakness in the stock indices. Remaining above, should have the opposite effect. “It will be a big macro pivot this qtr”. 102.33 & 102.08 AUD/USD are the past 2 yearly closes.
The big fly in the ointment this year will be Oil risk. Oil has become the risk commodity/ surrogate currency Du Jour, replacing the precious metals late last year. How high will Oil go before imploding the equities as in 2008?
This will Not be our our strategy…We are going to do exactly what we did last year…Be patient! Take trades on our terms with limited risk… then take the money!
Our view is that the beginning of this this year will be a High Volatility, Highly Technical, Rumor Driven, Time Frame, Lemming Effect Day Trade, on very thin volume just like most of 2011. The question is who’s day? Right now it’s still Europe’s.