30 Yr. Bonds…140.15 is the print we’ve been looking for when we first bought the bonds in the 136 handle. Now that the entire expected swing has been completed, we will await further price action before deciding our next move. A retest of 139.05 would not be unexpected, and should be support the first time back down. This is close to where we exited the last of our long trade.
SPU’s…1370 ish is the 50 day on the all session chart, while the pit shows 1366 +- a couple as the next zone to watch. Minor stops are below 1366.
SPU/BONDS…9710 should prove a troublesome level the first time down. “Equities should find some support vs. the Bonds”
NASD…2700 + a couple is the next near term support zone, with stops below. 2650’s is the first macro fib support.
EURO…The levels remain as stated in Thursday’s A.M. Look. Price action below 130 is needed for another leg down.
AUD/USD…near term buy stops remain 103.40 and this level should be used to manage any shorts.
Yen Crosses...remain as stated in Thursday’s A.M. Look.
OIL…104.05-40 is macro resistance.101 becomes a big closing level for further downside. Closing below this level can lead to a big swing down in prices consistent with a bigger risk off scenario.
General Comments..
It’s been a SPU/BOND show…There is no reason to think it won’t continue to be. Keep your attention on the spreads,albeit SPU/BOND or the Yen Crosses, which keep telegraphing Risk On or Risk Off.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
Long QID/Short NASD 29.40 33+
Short EUR/USD 131.66 GTC
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!
Take what the market gives you , will be the order of the day.
Trade to Make Money!
Medium Term View…This will be updated next week for the 2nd Qtr.
30 yr. Bonds … 138.00 ish now becomes our macro pivot. Closing above this level would be short term positive the Bonds and negative the Equities. We will look to buy a multi-point break in the 30 for a rally into the fall in keeping with a general risk averse market theme.
Equities…While, we were in strategic buy mode for the first quarter, we now believe the market is fairly priced. The equity indices deserve a break. The operative question becomes, from what level and when can a break develop. We will monitor instruments on an individual basis vs. the general Risk On/ Risk Off correlation we saw last year, when most instruments traded via the theme of the day.
We’ve been doing this 35+ years…I’m hard pressed to recall a year when we haven’t gone back and attempted a re-test of the yearly close in the equity indices at least once. Yes, we are looking for a re-test over the next 5-4- months. Indices can still grind higher to the upper tgt levels over the next few weeks before profit taking ensues.
We are going to be highly flexible this qtr….we are not getting married to a central theme , nor are we getting into the long term prediction business. Having a bias is one thing, being patient and executing with a defined risk parameter another. Our business is Risk Management.
Currencies…AUD/USD continues to be a good risk barometer. 102 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.