Full Moon Trading with the mid-week shuffle
XLF… (Financials) put in an ORL day. Follow through to the downside is needed below 15.60 to trust the pattern.
KBE… (Banks) same as above. This needs sustained price action under 23 for follow through.
XLV…(Healthcare) put in an ORL day. Sustained price action under 39.50 is needed to trust this pattern.
GOOG…put in an ORH. This needs to maintain above 666 ish to trust the pattern.
DE…after putting in a Bullish formation this needs to maintain above 83.80 to maintain the pattern.
Spu’s…Presently there is a weekly double top working @ 1407.50. Any shorting should be managed against that high.1386-88 is near term support.
Nasd 100…2661-64 is near term resistance. All new closing strength over this level is needed for another leg up to 2700.
Good near term support is just above 2600.
Euro…is trying to turn back down by staying under 129.45. We have no desire to trade this outright, however EUR/JPY
and AUD/JPY have come a long way in a short time. Weakness is these crosses should reflect a Risk Off board.
Crude...86.67 will be the near term closing pivot.
General Comments…
Time to see which patterns are real. Bears, you want to see more failed rallies today into tomorrow.
Bulls, you want to see a run down into support with a big late week rally.
For now the Equity indices are trading into Zones that can hold, with investors willing to buy Treasuries
rather than selling the Equity Indices into these zones.
Time Frame Trading …..let it play out.
Reality Check…Last months close in Nasd is 2640.50 & Spu’s 1406.75.
Be aware of where the market is trading with month end Friday.
Model Trading Portfolio……………..
Stop Close Profit Points
Long Feb AAPL 550/575 call spread
We’ve taken profits on all outstanding S&P positions and are now
down to a 20% Long weighting in AAPL as of 11/19/12 NYC close.
Short Term View…
Short Term trend has been down in the Equity Indices…(Risk Off).
We initiated Risk On Positions off Friday 11/16/12 low. We’ve taken the bulk of those profits.
We’re looking to flip these positions and our bias for a short trade on a spike in the Spu’s over 1400.
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. (This correlation is currently breaking down) 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.