The Yen Crosses are running the “Risk On” show. The Yen Crosses are important “Risk On” Barometers!
At resistance levels in the crosses, the equities stall out. At support levels in the crosses, the short sellers get trapped causing rallies.
Today it’s the Yen running the crosses with the Euro hitting short term resistance at 134.00. Currency traders need to pay attention to the game.
EUR/JPY…the 200 mvg avg is app. 10714. Sustained action and closing above this level is positive the cross. 109 & 111 are the next 2 significant levels going up.
AUD/JPY…86.40 is a key closing level. 87.70 ish comes next, with buy stops starting in the low 87.80’s. We’ve been saying we think this can go to 90 to test the 2011 highs. This cross has been in a 20 figure range since mid 2009.
CAD/JPY & GBP/JPY…both have plenty of room on the upside.
OIL…we’re at an exit level, however I am not inclined to get out of everything. Watching the nightly news is enough for me to give it the weekend. Only price action under 105.80 would be meaningful at this point and should be used as a “trailing stop”. We would expect it to take a rest in here. Traders choice, we’ve come a long way. Taking the money is not an imprudent choice.
Metals & Miners…these instruments will play their hand next week. Both Gold and Silver have come up to a major hurdle ( resistance levels) at yesterday’s highs. Gold can weaken with price action under 1775 today.
More price action and time is needed to break through resistance and start another leg up. Baring that, maybe they just blow something up in the Mideast and we take off. Either way we’ll try and stay the course.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
Long XLE 71.60 80
Long OXY 102.40 110/117
Long USO 37.80 44
Long Oil 105.80 116
Long Canada Dollar Futures 99.54
Short USD/CAD 100.50
We’re at 30% in the above instruments…
Long GLD 168
Long Gold
Long GDXJ 28
Short Term View
Location ,Location,Location….if you have a good trad able pattern “Good Risk reward!” You just have to seize the opportunity and see what develops!
Trade to Make Money!
Medium Term View…
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.
We’re going to be eyeballing a “possible” Long over the next couple of weeks via either the 30 Yr. Futures of the TLT ETF. We will be monitoring the Spu/Bond spread to onfirm a trad able level. While the markets could certainly turn at month end, the week after could provide the better opportunity. Since we only trade what is in front of us,we’ll wait for a proper setup to initiate.
Equities…We will continue to strategically buy hard breaks in Etf’s and individual instruments we feel have the best risk profiles going into the end of the first qtr.
Currencies…Our view is the Aussie Dollar remains a most attractive investment. The Bonds are high yielding making this currency desirable on breaks. It also has the benefit of the underlying commodity and Asian growth story to support buying the dips.
The Aussie typically mirrors the S&P 500 which also makes it an easy surrogate to trade, whether Risk On or Risk off. It’s liquidity makes it easy to hedge currency risk if you’ve the underlying Bonds, which makes you Long Aussie by default.