This portfolio is about as Risk Off as I get. Time will tell whether the patterns are true, or if we were just subjected to another 1 day wonder. In general, it takes a couple of days to change direction, so today will be about where and if the rallies fail.
In a world where many instruments have decoupled from the broader market, like AAPL for example,each investor would be wise to do their homework and review risk tolerances on current holdings.
Short AUD/USD & EUR/USD are still contra the yen crosses. The Yen has remained weaker than the others basis the crosses. This leaves the possibility of a retest of the reversal close in the Euro @ 133.90, which we will sell the first time up if given the opportunity. The Aussie could rally back to 108.10. The Commodity currency crosses are still showing Risk On via the yen crosses.
Aussie…is till pretty a much a mirror image of the Spu’s, they might not move perfectly in tandem, but the trade has been similar. Bottom line, the Aussie failed to complete the ORL Chart pattern yesterday and held, just as the Spu’s failed to do any damage yesterday under it’s macro model # in the mid 1350’s. If one is right , they are both right.
Presently the Aussie, based off the Point & Figure Charts, needs over 108.30 or under 107.10 for a new signal.
We got the daily ORL reversal in the Spu’s, now we need a Friday close under 1350.25 SPH for the Weekly ORL. This would put Risk assets into Full Flight. The Spu’s could rally to 1368-70 +- and still be no good. It’s the first day of a new month, so It would not be unexpected to see some buying in the first 30 minutes from the income average rs allocating new money.
USH…March 30 yr. Bonds…note that I am using March not June for another 2 weeks. I’ve seen too many false moves telegraphed over the years on these qtrly rolls not to rely on a front month continuation chart. March Bonds just elected the near term stops below 142.08.
Game Plan…let the day unfold….we’ll give the board some time to develop.
Leave your stops in place.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
Long SDS 15.80
Short EUR/USD 134.10
Short AUD/USD 108.10
Long 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.