Friday being Qtr’s end, the one thing we aren’t looking to do is fight the capital flows, which are still up in the Equity indices and down in the Bond Futures. It would seem logical to see this flow continue into next Monday, with the typical mid-week shuffle.
Spu’s…need sustained action above 1402 to trade to the 1417-20 level, which remains the initial swing count. Everybody has got a # up here. We are going to be patient and wait for higher levels before selling the stock indices. Last year we had a very significant rally into the first trading day of May. Point being, I would rather miss a little bit then get run over trying to be right.
Keep in mind that AAPL,GOOG,IBM and instruments of their ilk, are trading in their own world, while other big cap stocks like OXY,CAT,DE,CVX have already had corrections of 8-10%. This needs to play out into the end of the Qtr. The bigger game starts anew in April, when Capital flows have a higher probability to change direction.
The 30 Yr.Bonds should continue to be the better short term trade. We will keep our eye on the Spu/Bond spread to see if we get some portfolio re balancing this week. A close over 138 is needed for further upside.
Currencies... The Yen crosses are still running the show. Short term traders involved with any individual Dollar should make sure they line up their technical s with the crosses.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Point
No current Holdings
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…This will be updated next week for the 2nd Qtr.
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 this week 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.