Yesterday found me beating back my accrued Pavlovian tendencies from my charged years of Pit trading. I wet myself and realized my issue before I embarrassed myself. We try to limit those episodes.
Right you are! I’m not alone, we all do it, it’s part of trading. If someone says they’re flawless you had best stop reading them. The beauty of trading is that you can get back in or wait for the next train to leave the station.
Gold…the big closing level is still just over 1805. This level will choke out the last remaining die hard shorts as well as generating new swing counts higher.
Given the sabre rattling in the Mideast, we’ll give this a little room to see if it will go.
Oil…went up and took a peek at that Qtrly level we mentioned of 106.75. Point & Figures show there is no new signal until we see sustained price action under 105 + – 25 points. We’ll stand pat with our present exposure and continue to monitor the action.
Currencies…
The commodity currencies such as the Aussie & Loonie show Risk off, while the Yen crosses are holding in remarkably well ( Risk On). It’s interesting to note that the first leg of this cross move ( EURJPY,..AUD/JPY,..CAD/JPY) was led by Commodity Currencies & Euro strength.
Since St Valentines day it’s been all Yen, making it difficult for the other currencies to remain bid. The leaders can change, so pay attention to the crosses. Euro and Aussie are back in the saddle, leading since the Asian session.
Yen… The straight futures are oversold on the shorter time frames and look to be in an area on the qtrly charts which could prove sticky. Meaning, selling weakness is not a good idea. You’re far better off trading it via a cross if you think there is more downside in the straight Yen.
Euro..looks to be headed for 134 ish for a start
JJG…We’re putting this back into our portfolio on a close over 45.50, looking for another 8-10%. This would require the Soybeans to maintain over 12.80, coupled with Wheat maintaining above Tuesday’s High (6.48), and the 50% of this swing ( 6.52-3). We need sustained price action and a closes over these areas for confirmation.
Cat…we monitor these big cap stocks because they tend to line up with the indices. Cat presently has a potential double top on a yearly pattern @ 116.45. It’s not an insignificant level and price action must be assessed around the # for the next potential move, particularly in light of the fact that it just doubled from the Oct. low.
“It’s another market tell”. So far, there has been only an acknowledgement from Mr. Market that it knows the level. Separation from this area is needed to discern the next swing. Sustained price action over this area would generate higher tgt’s.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
Long XLE 71.60 80
Long OXY 102.40 110/117
Long USO 37.80 44
Long Oil 100.50 intra-day 105
Long Canada Dollar Futures 99.54
Short USD/CAD 100.50
We’re at a 30% Long in the above instruments
Long GLD 168
Long Gold
Long GDXJ 28
Short Term View
Location ,Location,Location….if you have a good trad able pattern “Good Risk reward!” You just have to seize the opportunity and see what develops!
Trade to Make Money!
Medium Term View…
30 Yr. Bonds …147 is the all time high in the front month futures. We will watch price action off this level for any potential surrogate moves in the currencies or stock indices. 144.20 ish now becomes our macro pivot. All new closing strength over 145.20 would have us looking for more upside in the Bonds. Closing above this level would be short term positive the Bonds and negative the Equities.
Equities…We will continue to strategically buy hard breaks in Etf’s and individual instruments we feel have the best risk profiles going into the end of the first qtr.
Currencies…Our view is the Aussie Dollar remains a most attractive investment. The Bonds are high yielding making this currency desirable on breaks. It also has the benefit of the underlying commodity and Asian growth story to support buying the dips.
The Aussie typically mirrors the S&P 500 which also makes it an easy surrogate to trade, whether Risk On or Risk off. It’s liquidity makes it easy to hedge currency risk if you’ve the underlying Bonds, which makes you Long Aussie by default.