We were stopped out of our remaining EUR/JPY on the opening last night.
Date: June 7, 2012 7:22:56 AM CDT
CAD/JPY & GBP/JPY…are both coming up to their respective 200 mvg avg’s.
124.07 GBP/JPY
77.96 CAD/JPY
CAD/JPY is an excellent Risk barometer that has been highly correlated with the S&P 500.
Watch for general mkt tone.
AUD/JPY…78.64 was last years close. By remaining above 79.67-97 is next.
OIL…86.71….88.85….90.62-
Today….
AUD/USD…probed a potential weekly double top area. Price action and a close over 100.18 is needed for more upside.
Spu…1349 (M).. 1342 Sep…last nights early high, is a 50% fib retrace from the recent May high. Short support coming back down, is 1334.25 (M) ….(U) 1330-1329.50.
Nasd…2571
30 Yr…147.00 (U) is a big support zone.
General Comments…
I sent along the Italian 10 yr chart. Although the pattern is coming down into support, the general pattern tells me that not everyone thinks this bank bailout is the last of the Europe’s woes. These also tend to trade with the Euro.
Over the next 2 days the market will continue to try and back and fill. ” test last weeks highs and closes”
The whole board has been Risk Off since early Asia after the initial pop up in all Risk assets. We need a little time to see if that was all a knee jerk reaction to the bailout, or the market can get some legs.
SDS Position….Game Plan.
First thing to do is cancel your stop so it won’t get auto elected on the opening. The best course of action seems to give it a little more time going into the NY opening to see how Europe will react with the U.S. liquidity added.
We’ll adjust that stop after the opening.
Model Trading Portfolio
……………..
Long SDS ( 1292.50 Spu) Pay for your trade
Short Term View…Every Trade is the same trade. It’s either Risk On or Risk Off.
It’s time to hit singles, then take the money and run. The board is trading Risk Off with rallies for the past month, in all Risk assets, being met with sellers.
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…
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.
Copper…We’re looking to sell all rallies in the Copper against a 377 weekly close. We regard this as an ancillary short to the general Risk off theme we see going forward late into this qtr. Weekly closes much over 382 will give us pause to re-evaluate our premise.
I’ve been doing this 35+ years…I’m hard pressed to recall a year when we haven’t gone back and attempted a retest of the yearly close in the equity indices at least once. Yes, we are looking for a re-test in the next few months.
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 “Intelligent 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.
Natgas…we’re looking to buy this @ the 1.70 level.
GLOSSARY
