Metals…Yesterday’s lows in the Gold, Silver & GDX should be used for short term money management
on Long positions.
Miners…
BHP…66.81 was the 2/3rds coming back on the month. This needs to bounce from this level or lower levels will be seen.
FCX…had a good bounce off the 200 day. Let’s see if it can extend up.
MCP…10.70 becomes the key hold level.
NEM…held the 18 day. This has to hold 53.80 on a closing basis for higher.
PAAS…needs to maintain above 19.50
Oil…has completed it’s swing to the downside after closing below our pivot. 89 was a significant Fib retrace hold and our short term tgt. We are not looking for lower prices unless we see a good close below 89. We’ve seen all our expected price action for now.
Grains…are not finished going down. We’re still expecting to see another 75 cents lower in the Soybeans as long as they
do not close above 16.45.
Natgas…price action around 3 becomes critical to maintaining a bullish bias. This will be a key hold level. Back below, the Bears regain short term control.
Copper…368-37075 will be the technical support level to watch. Closing and maintaining above 37150 maintains a firm tone.
Silver…is acting well. Only a close under 33.65 would have us looking for lower prices at this point.
Equity Indices…all show possible tops. This simply means were now focused on where rallies lose steam.
Spu’s…1425 is near term support with 1445 being a low risk sell level.
Nasd 100…2771 was where we started the month. Closing below is price negative.
USD/CAD…is trading close to unchanged on the month. 101.44 is the Futures #. Maintaining this level should be generally seen
as price positive Risk assets.
EURO…needs back over 129.15-20 for a rally to 130.
128.26 is the 200 day. Near term Fib support for this swing is closer to 127.40
Bunds…need to close over 142.30-40 for another move up.
General Comments…
Tuesday’s Outside days in the Equity Indices and the Bonds leaves room for a market top. Technically, you couldn’t have asked for a better scenario. Now we have to see how high we get on a retest of the pattern.
We’ll be looking to sell any big rally against our pivots, which are now a lot higher. The macro pivots will not change. It will take closes over 1462 in the Spu for another leg up.
The Risk On crowd will be looking at yesterday’s lows as a value trade. We’re going into Qtr end tomorrow with some Fund average buying expected on Monday, the first trading day of the 4th Qtr. They will buy looking for another leg up.
A lot of money managers are under invested in the Equities, so we would not be in a hurry to sell anything unless given great trade location. It would seem that Bears could be patient until after the qtr end marking.
Model Trading Portfolio
……………..
Long XCO
Long TBT 14.80 17.40-60 / 18.70/ 23
Profit areas have been hit. Investors should have reduced positions. Small core longs should be left.
We continue to favor singles stocks or instruments over the broader indices, then take the money and run.
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. Short term these commodities have run their course putting in interim highs. The grains need to digest before we get new signals.
Corn.. 7.55 is the macro pivot and a close below will lead to good profit taking.
Medium Term View…Our medium term outlook will be updated the first week in Oct.
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 have been the driving force on the spread. There is not a lot of demand for minimal yields even when the equities turn negative. Now it’s all about the Bonds!
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.