ECA…put in an ORH day yesterday. This instrument needs closing action over 21.40 to confirm more up.
AAPL…Those of you that bought the July 27 calls early yesterday should now have a free look going into today’s earnings.
Spu’s & Nasd…we view this as a big range trade. Our bias is to sell the big rallies and buy the breaks until it breaks out one way or the other. Spu’s need to show a couple of closes above 1374 or a couple below 1333 for a directional chase.
30 yr. Bonds…back filled after double topping early yesterday. It’s still a Spu/Bond show.
Sugar…24.00-15 is the next Fib resistance area. This is potentially a short term double top area.
Grains…Old Chicago adage..” When it’s raining on LaSalle St traders will be selling” It’s raining on LaSalle St.
Wheat…With the ORL yesterday leading the profit taking . I wouldn’t be in any hurry to buy the first break in the Grains.
Corn...7.55 is the downside pivot
Precious Metals…still refuse to break out.
Euro…as stated below….the static levels are 120.70 +- a couple followed by 119.75. The Euro has shown little rebound off the first level from yesterday’s low. This needs at least an 80 pip rebound for bottoming action which we have yet to see.
Oil…this is presently in a 2 dollar range. Below 87.70… 87.20 followed by 86 ish is the downside.
General Comments…
I find it difficult to see a lot of downside in the Equity Indices before AAPL earnings today, however a miss and it’s adios and another blow out will provide one more rally to sell in the Equity indices.
The Equity market has been one mid-week extreme after another. Be patient for your preferred levels. Bears should be vigilant for another late mid week high to tee off on.
Model Trading Portfolio
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Long XCO
Long ECA 19.80 23.80 / 25
Short Term View…Every Trade is the same trade. It’s either Risk On or Risk Off.
We continue to favor singles stocks or instruments over the broader indices, then take the money and run. The summer is setting up for another roller coaster ride.
The Grains and the Softs will provide the best trading opportunities over the near term. The weather should make these instruments the better trading venues. We will look to buy 8-10% breaks.
Use the June closes for your short term pivots in everything.
Medium Term View…
30 Yr. Bonds …150.15 ish now becomes our macro pivot. Closing above this level would be short term positive the Bonds and negative the Equities. We will continue to look to sell good rallies for the foreseeable future.
The Spu/Bond spread has been running the show all year.
The Bonds have not had big reactions to the latest equity swings, which just tells us that the Spu’s are the driving force on the spread. There is not a lot of demand for minimal yields even when the equities turn negative.
We will be monitoring the Bonds for a breakdown in the existing correlation. “Long Equities=Long Bonds” going into the fall.
Equities... last qtr had us looking for a trip to last years close ( 1250) and we came close. This qtr should be a 2 way trading affair. When the board goes Risk on as it did 6/29/12 , look for high yielding beaten up names to provide greater returns with a lower risk profile than the indices. We will use 1333 as our level for bias.
Copper…Dr. Copper caught the recent low in the Equity indices. We’ll monitor the 360 level to possibly match up with another shorting opportunity in the Equity Indices.
Gold & Silver…the June lows now become extremely important support levels.
Currencies…
AUD/USD continues to be a good risk barometer. 102.25 ish 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. In the big picture the Aussie has completed swing counts in both directions from the 111 high to the 95 level twice over the past 2 years.
USD/JPY…79.22 will be our macro pivot. ( App 126.40 Futures). Look for this level to run the Yen crosses against the Commodity Currencies. Use the crosses as the general risk tools they’ve been all year. CAD/JPY…AUD/JPY up, it’s Risk On.
EUR/USD….“119.75” +- 100 pips….is the macro pivot. Any price action the first time into this zone should be suspect ( possible Bear Trap), however closing a couple of days below this level is key to another big swing. This level has run several 20 cent swings in the Euro. It’s a significant area! These #’s are static and will not change.
Natgas…We will continue to strategically look to buy hard breaks. The names will continue to be our preferred way to play
the Natty. For the average investor the names provide more liquidity and a user friendly venue for capturing Alpha.
Grains & Softs…the summer weather market is upon us. Our long term strategy is to buy 8-10% breaks in the ETN & ETF’s.
Oil…continues to be a good demand indicator, with failed rallies telegraphing little follow through in the Equity Indices.
78 which is the 50% Fib for the life of the Futures will be a key level. Near term, we have tgt’s for this swing @ 88-90.
When the market is Risk On the names here will provide a better trading venue for the average investor.
