Mid-Week Shuffle…”often violent contra-trend price action” I.E. if a market is trending lower, the market tries to save itself with with rallies to nowhere ( generally from a very oversold short term condition) which leads to pressure release of the Rsi’s. These levels are generally easily identifiable, if you pay attention to how all the ancillary instruments are lining up ( matches).
A.M. Look 5/9/12
It’s the Mid-Week shuffle. The board has a risk off bias. Sell rallies not breaks in Risk Assets. Hamsters...you’re looking for short term oversold conditions to trap shorts for relief rallies to nowhere.
Yesterday’s price action is exactly what I was alluding to. Hamsters ( short term players) press direction into major Fib levels, when the condition of the market is very overbought or oversold. This leads to a Lemming Effect Trade the other way.
General Comments…
Since they tried them down (Equity Indices) early last night, you could see another attempt at a rally. Base your trading today off of tight trade location parameters.
The bigger game will likely be played out later in the day.
NATGAS names….today is the inventory release for Natty @ 9:30 CDT…
Grains…will be active with a crop report before the opening.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
No Current Holdings
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.
Copper…We’re looking to sell rallies in the Copper against a 377 weekly close. We regard this as an ancillary short to the general Risk Odd theme going forward into late this qtr.
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 Intelligent 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.
NATGAS…We’re looking to buy the Natty @ 1.70.