Spu’s…last night’s high was again the 200 day, which is acting like a magnet.
30 Yr….look for 150.15 to stop the Spu/Bonds on this wiggle the first time down.
EUR/JPY…last night’s high was again the 200 day ( app 102.17), which is acting like a magnet.
Euro…rallied to old support which is now resistance around 127.50 + a few. It needs all new strength
above this level to push towards 128.25.
USD/JPY….Yen…when the Yen gave me my entry level last week I summarily wet myselfand pushed the trade.
This is a classic example of impatience and placing a livable stop ( then let the market take you out!). Sometimes it takes a few days for the intermediate direction to change.
General Comments…
Yesterday, as the Brits say,I took a punt.
I chose black,which at the time had potential, with me looking for a mid week contra-trend
trade to squeeze some juice out of the options. Instead I got juiced. They immediately lost 50%.
I might not be 100% wrong the direction of the mid-week wiggle, but my timing was certainly way off.
Not the end of the world…particularly when you put it within the context of the Spu’s moving 20 points on an average day.
Using the expiring options can be a very cheap way to play a direction, particularly going into these expiration days.
Model Trading Portfolio……………..
Stop Close Profit Points
Long Nov. S&P 500 1400 calls
Short Term View…
Short Term trend has been down in the Equity Indices…(Risk Off).
We’ll continue to look to fade Mid -Week Strength until proven wrong.
Medium Term View… updated qtrly
These are static levels that do not change.
30 Yr. Bonds …150.15 ish is our short term upside pivot. Closing above this level would be short term positive the Bonds and negative the Equities. Closes below 145.20 will be needed for another leg down in the Bonds. Short term we have held and we will continue to favor the short side of the Bonds when market conditions allow.
The Spu/Bond spread has been running the show all year.
When the markets trade Risk Off the Bonds will be the vehicle of choice to receive those outflows from the equities. Meaning, you have to be very patient with your sell levels in the Bonds. They can still get priced to very low yields with the help of investor sentiment and Fed meddling.
We will be monitoring the Bonds for a breakdown in the existing correlation. “Long Equities=Long Bonds” going into the fall. So far the Bonds have been a better indicator of Risk aversion.
Equities... last qtr had us looking for a trip to last years close (1250) and we came close. This qtr we’ll use 1462 close as our upside closing pivot.
Gold & Silver…the June lows now become extremely important support levels. Both metals have been used as the long side of the spread against Short Euro & Aussie. Investors have been buying Dollars and then purchasing Precious Metals with those dollars.
Currencies…
AUD/USD… continues to be a good risk barometer. 102.25 ish 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. In the big picture the Aussie has completed swing counts in both directions from the 111 high to the 95 level twice over the past 2 years.
USD/JPY…79.22 will be our macro pivot. ( App 126.40 Futures). Look for this level to run the Yen crosses against the Commodity Currencies. Use the crosses as the general risk tools they’ve been all year. CAD/JPY…AUD/JPY up, it’s Risk On.
We will be looking to short the Yen around 130.50 Futures, start looking under 77 USD/JPY for a potential Yen high.
EUR/USD….“119.75” +- 100 pips….is the macro pivot. Any price action the first time into this zone should be suspect ( possible Bear Trap), however closing a couple of days below this level is key to another big swing. This level has run several 20 cent swings in the Euro. It’s a significant area! These #’s are static and will not change. Furthermore, only closes over 131.50 will be price positive.
Natgas…We will continue to strategically look to buy hard breaks. The names will continue to be our preferred way to play the Natty. For the average investor the names provide more liquidity and a user friendly venue for capturing Alpha. 3.00 now becomes the key hold and pivot area for the next qtr.
Grains & Softs…Our long term strategy is to buy 8-10% breaks in the ETN & ETF’s.
Corn.. 7.55 is the macro pivot.
Soybeans…16.50 will be used for our macro closing pivot.
Oil…continues to be a good demand indicator, with failed rallies telegraphing little follow through in the Equity Indices. $78 which is the 50% Fib for the life of the Futures will continue be a key level on the downside and $100 on the up. When the market is Risk On the names here will provide a better trading venue for the average investor.