General Comments…
I’ve spoken to many of my longer time frame clientele ( Private Wealth guys and Money Managers) over the past few days. Many of you are looking for the old holy grail of buy and hold low frequency trading. Unfortunately, we’re currently not living with that type of market .
The world is a Lemming Effect, Robot Driven, low liquidity, Time Frame Trade. And right now the Time Frames are shrinking so we’re seeing bigger moves in a shorter span of time. Meaning…you have to hit singles or don’t be involved.
We will continue writing the big areas we believe can turn the tide in the opposite direction for those that are more active. The rest of you are best off keeping your powder dry until such time as we see another longer time frame set up. These next 2 weeks are seasonally bumpy.
We had a four month grinding rally and that game ended May 1. Now, it’s a big back and forth track meet akin to last summer.
Use the time wisely to compile that wish list for the next swoon. Do some Homework! I.E.
MCD doubled this year. It’s now in profit taking mode. I’d love to be able to pick this up in the mid 70’s if given the chance.
CHK.. is a fine example of identifying juicy technical levels. In April we wrote 13.30 was a good place to look for a bounce with a very tight stop. “Intelligent Risk Management”. Case in point for you fundamentally driven traders….This printed the technical area First! Then Icahn came to the rescue! This has rallied 30% since printing 13.32 May 14th.
Fundamental Macro Traders will get their brains beaten in if they don’t stay disciplined to the technical levels utilizing tight Risk control in this environment.
Just because you want something to be doesn’t mean it is….BE HERE NOW..” RAM DAS”
Trade what is in front of you or stay out of the fire!
For those of you not comfortable identifying those potential levels in instruments which are not part of our daily diet, pass the names on, and we’ll do our best to take a look.
Volatility is up and it’s a big area scalp. OIL broke 6 bucks in 24 hours and just stopped short of 80.85. Recovery and sustaining back over 82.50 can precipitate another round of risk buying from another oversold condition.
SDS…17.12 is the 18 day mvg avg. This needs a close over 17.30 to confirm another leg higher, which could take a few days.
UNG…This Natgas ETF needs a close over 20 to start up. This could take some time. In the meantime we’ll look to buy this when the Natty gets to the 1.60-70 area for a long term trade.
Model Trading Portfolio
……………..
Long SDS 16.25 intra-day ( 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.
