Short pretty much everything/Long Gold has been the complexion of the board for the past 2 days.
Everyone is waiting for Facebook to save the market. Pay attention to the opening range trade here! Sustained price action below its opening range will lead the Nasd to start moving lower in approximate 40 point increments. 2500 is Fib support, once convincingly through, the lemmings will form up for another lap.
The flip- -side, breaking out to the upside, can trigger a short covering rally in the Nasd with the same type of incremental moves.
It’s going to be another price action time frame day trade today.
General Comments…
I’m not sure what’s worse…Buying the 30 yr Bond futures in the 135’s and getting out @ 139 and spectating the rally or selling the Nasd against 2800 and missing the past 125 points. Any way you cut it, I need a head break.
Let’s use this as a teaching moment so maybe some good will come of it.
We live in a world of market “Takers”…Not market Makers. The evil tendency to make a market rears it’s ugly head from time to time in my trading as it did yesterday. Fortunately I’m also programed to instantly vomit! It’s a bad hangover from the 70’s. Today’s world is a robot driven directional (liquidity or lack there of) Lemming Effect “Time Frame” Trade.
Once those little beasties start forming up for a run off the cliff, they don’t stop until you hear that thuuuuud at the bottom. That’s the trade blowing up! I’m still waiting for the thud. The trick is to step aside before the edge of the ledge.
How do you know when to take that step away? Technical s help.
That pretty well encapsulates today’s trading environment.
Not to worry, Missed that stampede, I do it once a qtr whether I like it or not. Patience, it’s in the nature of a Lemming to form up for another go at the cliff.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
No current holdings
Short Term View
We have a Risk Off bias. We are moving to neutral over the next couple of days due to the length and depth of this sell-off in Risk Assets.
Risk assets in general are trading short term oversold…Again this simply DO NOT SELL weakness…Sell Rallies. Risk Assets traded overbought in the first qtr…now they are trading just the opposite,Oversold.
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.
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.