Grains…are all following through to the upside, confirming the break out patterns from yesterday. We have chosen to play this via Long JJG ETF. Wheat and Corn look particularly good.
Spu’s…and stocks in general should be firm into tomorrow’s LTRO announcement. There is a long term channel line that comes in the S&P 500 Futures in the high 1380’s. I see no reason to look to pick a top. The Spu’s and Yen Crosses both held key areas early yesterday, signaling a continuation of “Risk ON”.
Currencies…Yesterday say key assaults of reversal levels in the Yen crosses, which all held matching the 1352 level in the Spu. The Risk On board came right back. This is why we follow the currencies and the commensurate crosses, they are the harbingers of risk sentiment. Currencies lead…NOT STOCKS!
To be an effective Stock trader you must be aware of the currency flows.
EURO…was sold as a spread against our Long metals and Oil. Those of you that still have positions, leave your stops working 24/7 on a GTC ( Good Till Canceled) basis. You won’t lose any money on this, and as with everything else, if you’re going to get directional changes, it will be tomorrow not today.
Precious metals..an anticipated big LTRO should be positive this complex. Silver is presently running buy stops over last qtr’s high.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
Long GLD 168
Long Gold 1750
Long GDXJ 28
Short EUR/USD 134.80 133.30-40
JJG 45 48 ish
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.