30 Yr. Bond Futures…look like they need sustained price action 6-8 ticks over last nights highs to start another thrust up.
Euro Stoxx…21320 is the 18 day mvg avg and support. 21847 is the 50 day and resistance.
DAX….62550 is the 200 day…sustained price action below 62045 ( the 18 day mvg avg) is needed for negative price action.
Crude Oil…82 is the downside pivot. All new weakness will be needed under this level to break. All new strength over 84 is needed to get traders excited about any up side.
Markets are trying to decide the next direction, which will likely take into tomorrow’s Fed meeting to play out.
General Comments…
Trade Location 101…Yesterday one of our new clients placed his sell orders in the Aussie Futures just below 100.60 ( in the mid 50’s) and got filled for a nice scalp. This is a good example of proper utilization of the work and trading the level or area, not the exact tick.
Cash traders just got filled on the first 25% within the last hour. We’re looking for 50-60 ticks to pay for the trade…take some money in to pay for the stop, mainly because this is a Risk Off trade with a board that is trading Risk On.
Model Trading Portfolio
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Short AUD/USD 102.60 100.80-101 pay for the trade
Short Term View…Every Trade is the same trade. It’s either Risk On or Risk Off.
It’s time to hit singles, then take the money and run. The board is trading Risk Off with rallies for the past month, in all Risk assets, being met with sellers.
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…
30 Yr. Bond Futures … 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 all rallies in the Copper against a 377 weekly close. We regard this as an ancillary short to the general Risk off theme we see going forward late into this qtr. Weekly closes much over 382 will give us pause to re-evaluate our premise.
I’ve been doing this 35+ years…I’m hard pressed to recall a year when we haven’t gone back and attempted a retest of the yearly close in the equity indices at least once. Yes, we are looking for a re-test in the next few 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 this @ the 1.70 level.
Encana Chart:
SOX Chart:
