Euro…as long as the Euro stays over 131.30 close it will stay firm with a tgt
around 135.
Yen...as long as the Yen futures do not close above 119.80 it has a destiny with lower prices.
Oil…we’ll look to add to our Long Oil @ 88 with the same stop.
AAPL…with Monday’s ORH day we’ll treat this as the bottom and a trad able low. Only closing below 518 will give us pause to re-access. 537 is first fib resistance followed by 547.
Gold…most Quants have the low 1650’s boxed in as the preferred low risk buy zone in the Gold.
It had a nice reaction yesterday off the first assault of the 200 day mvg avg. Typically this is a good technical spot to try any instrument the first time in. Then you have to see how much of a reaction you get off he level.
1675 seems to be a descent enough bounce.
30 yr…we’ll look to get short at the 148 handle. Shorter term players should look for price rejection the first time up to 147.04-10
General Comments…
The currencies and the Yen crosses in particular are very overdone (directionally stretched) on the daily charts. This simply means that selling weakness in the Yen or buying strength in the Continentals will be dangerous and short term traders must use very tight stops.
When instruments get overbought or oversold the characteristics of the trade change from a fluid back and forth to a grind.
I.E. From this time last year the Equity market melted up into the end of the first qtr. with terrible price action. That just means it’s a lousy trade.
We’ve been talking about the undervalued Oil names, Financials and the beaten up big cap Multinationals as the place to look for value for a while. You need to be looking for value in the names that haven’t already left the gate.
Gold…we were stopped out on our trailing stop yesterday during the day session, when the world sold Gold and bought anything
they deemed showed a dividend or yield.
Model Trading Portfolio……………..
Stop Close Profit Points
Long Feb AAPL 550/575 call spread
Long Feb Oil 87.20
We consider a break to be 30-40 Spu points from the previous high for a trad able low. Nasd tends to move in 40 point increments.A big standard deviation move is generally 80-120 S&P points from any previous high or low.
The most important week of the month starts the 17th, with all the futures and options expiring just before Xmas.
Medium Term View… updated qtrly
These are static levels that do not change.
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.