Spu…1402 is the macro closing upside pivot.
Nasd 100…2715 ish is the macro closing pivot.
30 yr. Bonds…148.12 is the closing downside pivot.
SPU/BONDS…94.40-50 is near term resistance
AUD/USD…105.72 is the macro closing upside pivot.
AUD/JPY….83.25 is resistance…82.50 ish is support. As always watch this cross for confirmation of equity Index follow through.
Oil…yesterday reached major fib retrace and moving avg resistance coming back up on the year around the 94.50-80 level. It doesn’t have to go any higher, however with sustained price action over this level 95.80 ish will prove problematic for directional traders, meaning it’s an exit zone that would provide a better shorting opportunity than a long initiation the first time up. Possible Bull Trap.
General Comments…
The pivotal levels will not change.
Less is more today. Nat gas storage report @ 9:30 CDT and a 30 yr. auction @ 12:00 could be market moving.
The JJG is trying to form up for another run higher. A close over 62 will be needed to entice me to play for a little more upside.
AUD/JPY…is stuck. Look for confirmation of Equity Index direction via this cross.
Trading Portfolio
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Long XCO
Short Term View…Every Trade is the same trade. It’s either Risk On or Risk Off.
Equity Indices, Aussie and the 30 yr. bonds are all trading at our pivot levels from March…
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.
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. When the market is Risk On the names here will provide a better trading venue for the average investor.