Title…It happened one night or Boner gets Boned!!!
It’s the Rocky & Bullwinkle show.
That was the type of price action in the E-Mini’s have not seen since the Flash crash, although
this one was only a mini…50 handles, they cleaned out every stop in the deck.
In one minute the Spu went from 1427-1391.25. The next print was basically 20 handles higher.
The Bots cleaned up!
If memory serves, we haven’t seen an expiration in almost 20 years where the cash will settle 40 points away from the Thursday Futures price. Some things stick in your mind and this is one of them. This type of price action was not uncommon in the 80’s and early 90’s. I can’t recall this big of a move since Clinton’s second term.
That expiration, a Lind customer, tried selling 2000 calls on Thursday for a tick….there were no takers…
Friday morning he exercised the calls for 14 mil. app 50 points higher in the Spu
Surely this is the biggest advert for trading Futures vs. ETF’s and Humanoids vs Bots imaginable.
Spu’s…1415 is unchanged on the week, it will be pivotal all day.
30 yr…Futures traders…if you left a resting order to sell the 30 yr. between 147.14-20 you got some off last night.
For everybody else, let’s hold our water for a bit and let this play out.
Gold…double bottomed on the point & figures last night on the sell off. The low to mid 1660’s will be resistance at the 200 day.
General Comments…
SPU/BONDS….here we go again. We got our print in the 30 Yr. to match up with a Spu low. That’s the first wiggle!!!!
147.23 is Fib resistance in the 30. It could easily print 148. 148.15 is the next low risk sell zone depending where the SPU’s hold.
If the Spu’s get lower on the week the Bonds will rally. Treat the Bonds as a trade and keep taking your money.
We are in no hurry to do anything!
Model Trading Portfolio……………..
Stop Close Profit Points
Long Feb AAPL 550/575 call spread
Long Feb Oil Break-Even 91.45
AAPL is a 20 % position.
Short Term View…We’re in buy the hard break mode again.
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.
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.