Equity Indices…No change from last week. We expect to see some early positive flows (buying).
This means the day will be a time frame trade and we’ll remain vigilant for changes in capital flows.
Copper…365-8 is the resistance area, only a couple of closes over this area will lead to higher prices.
This is a general Risk indicator.
30 yr…long time clients know I still follow the December Bonds for another 2 weeks.
Futures traders..Front Month Rules. We’ve seen too many false signals by not paying attention to the Front month
this time of the Qtr.
Oil…there are resting stops over 90.
EUR/JPY…remains firm over 106.80.
EUR/AUD…remains bid.
Cliff notes on the crosses…Don’t be a hero and sell the Euro unless you really love a particular resistance level
in the crosses, you won’t be happy.
General Comments…
Use Friday’s close’s for your near term pivots in everything.
Don’t fade the monthly bias right out of the gate.
It’s been a Risk On board since early Asia.
Nasd has been the leader for months with 2715-25 being the resistance zone. ( old Support now becomes Resistance)
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). It has decidedly turned up.
We initiated Risk On Positions off the 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. “This scenario has been played out” with the rally to 1407 and the break to 1383 on 11/28/12. We’ll look for another buying opportunity over the next 2 weeks.
We’re in buy the hard break mode again.
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.