It would seem that everyone has gone “all in” with the rise in risk assets yesterday. We were stopped out of our Short Nasd/ Long QID. We’re now in observation mode.
OIL…went from support, to big resistance in one session. We’ll be monitoring the 104 level to see if it remains bid.
AUD/JPY…84.66 is near term Fib support and last weeks low. Price action below this level would make it tough for the equities to remain bid.
This will be a day to exercise extreme patience.
The Thursday-Friday trading schedule will make for an interesting end of week game. Friday has Europe and the NYSE closed for this months unemployment data. Only the Globex Futures will be open, locking out the bulk of participants for the # release.
All bets will be placed by Thursday’s close, with Friday generally being a big event day for the metals, the ETF crowd will be sidelined until Monday.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
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!
Take what the market gives you , will be the order of the day.
Trade to Make Money!
Medium Term View…This will be updated next week for the 2nd Qtr.
30 yr. Bonds … 138.00 ish now becomes our macro pivot. Closing above this level would be short term positive the Bonds and negative the Equities. We will look to buy a multi-point break in the 30 for a rally into the fall in keeping with a general risk averse market theme.
Equities…While, we were in strategic buy mode for the first quarter, we now believe the market is fairly priced. The equity indices deserve a break. The operative question becomes, from what level and when can a break develop. We will monitor instruments on an individual basis vs. the general Risk On/ Risk Off correlation we saw last year, when most instruments traded via the theme of the day.
We’ve been doing this 35+ years…I’m hard pressed to recall a year when we haven’t gone back and attempted a re-test of the yearly close in the equity indices at least once. Yes, we are looking for a re-test over the next 5-4- months. Indices can still grind higher to the upper tgt levels over the next few weeks before profit taking ensues.
We are going to be highly flexible this qtr….we are not getting married to a central theme , nor are we getting into the long term prediction business. Having a bias is one thing, being patient and executing with a defined risk parameter another. Our business is Risk Management.
Currencies…AUD/USD continues to be a good risk barometer. 102 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 105.30 would be deemed near term positive.
AUD/JPY… 88.08 is the qtrly level we’ve been focused on. 90 is the macro upside closing pivot.