Yen…missed the long -term sell stops in the Futures by 13 ticks @ 123.43,( 81.75 USD/JPY) just after the opening last night. Since the opening hour, the board has been in “Risk Off” profit taking mode. 80.30-40 USD/JPY needs to be monitored for the next move in the crosses and the straight Dollars. Price action under this Dollar level ( over 124.60 ish H Futures) would lead to a deeper correction.
Euro..held the Qtrly Fibs on the upside. We want to cover 1/2 of our shorts @ app 133.30-40 ish the first time down. The stop should be lowered to just over last nights high.
Oil…over ran it’s tgt’s on Friday. This is a big reason we took almost all our money. Price action under 107.95 will have us close out the remaining exposure and wait for a deeper correction, which could be as much as 3-4 dollars. Point & Figure Charts show short term support just over 108.
Spu’s…are encroaching on 1352 support area. The level has been a field of broken dreams for the Stock Bears over the past couple of weeks. It still seems too early to be selling weakness in the Stock Indices, to expect getting rewarded.
General Comments…
As they say, “We’ve come a long way baby,” in a lot of instruments. This week has the potential to be gut wrenching. The Bull will likely, not willingly give up it’s gains. There is still the specter of a big LTRO announcement going into Month end, which would cause the Risk On party to continue. ( a retest of the highs / and or new highs mid week). Markets typically take a few days to change direction..
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 107.90 116
We’re at a 15% Long in the above instruments
Short Euro/USD 135.10
Long GLD 168
Long Gold 1750
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.
We’re going to be eyeballing a “possible” Long over the next couple of weeks via either the 30 Yr. Futures of the TLT ETF. We will be monitoring the Spu/Bond spread to confirm a trad able level. While the markets could certainly turn at month end, the week after could provide the better opportunity. Since we only trade what is in front of us,we’ll wait for a proper setup to initiate.
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.