Euro..put in an ORH day on Friday. It retested 127.52 last night. Holding this level can lead to 128.80 ish on an initial rebound.
GBP/USD…sustaining over 158.40 will lead to an attempt at a figure rebound here as well.
AUD/USD…This has the potential to go back over parity with any strength in the Equity Indices.
USD/CAD…101.50 will be pivotal. 100.66 is the 200 day. 102.26 is near term dollar resistance.
Oil…the first set of trailing stops are 93.90-94.16.
Spu’s…came within 10 handles of the 200 day mvg avg all-sessions of 1278. Price action over 1310.50 should lead to an attempt back to the 1330’s.
It’s noteworthy that the Russell closed just under it’s 200 day mvg avg. and Midcap right on it. Midcap …sustaining over 909 will lead to a rebound.
30 yr. Bonds…145.25-08 will be the zone to watch on the spreads. Trailing stops start @ 145.25.
General Comments…
The short swings in the Equity Indices and Oil should be measured from May 1. The same swing in the currencies should be measured from April 27th.
Note, For the Philistines that believe the Spu’s rule the world, the currencies topped a few trading days before the equities.The lack of currency follow through telegraphed that the continued rally in the equities was suspect.
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.