The world is in profit taking mode since Lunch time in Asia last night.
Yen…AUD/JPY..EUR/JPY..CAD/JPY..GBP/JPY.. crosses was where the action was last night. Yen Futures put in a double bottom pattern on a weekly chart right out of the gate, and then sat while Asia digested the Chinese growth forecasts coupled with a possible rate cut by the RBA tonight.
EUR/JPY…has corrected to the 200 day mvg Avg of 106.92.
The other crosses look to possibly have another 30-40 pips left in this swing before digesting for another signal. The Yen is leading this correction in the crosses. USD/JPY could show 80.80 USD/JPY today (app 123.79 H Futures).
AUD/USD…here we are again right back at 106.60. Aussie and AUD/JPY are mirror images of the SPU’s. They show Risk ON or Risk Off first.
EUR/USD…the #’s have not changed. We’ve come down into Fib support.
SPU’s…are the absolute tail end of the dog! Day-Traders should look to sell rallies not breaks. Those of you that bought portfolio Ins or are just outright short the Spu’s or Long SDS, just leave it alone. The stop in the SDS is 15.80 intra-day.
General Comments
The game will be to see if the U.S. wants to take their money today, after a giant 2 month rally in the equities, before the RBA meeting tonight.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
Short EUR/USD 134.10 131.50/130 70
Long JJG 46 48 ish
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 confirm 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.