Alright, good test of the blog. No luck with the trade. Stopped out @ 5.735 for a loss of $637.50.
I'll probably do a few more test days during the rest of the month before we go live in Jan.
Thursday, December 17, 2009
Moving Stop
I'm moving the stop up to 5.740 to save $75. This trade feels like it does not want to move higher. Market now rolling back over. Just an afternoon pick pocket to the upside.
QG Entry Update
Symbol: QGF0
Entry: 5.820
Stop: 5.730
Target 1: 5.905
Target 2: 5.995
Target 3: 6.145
Entry: 5.820
Stop: 5.730
Target 1: 5.905
Target 2: 5.995
Target 3: 6.145
QG Trade Alert (Test)
Symbol: QGF0
Entry: 5.830
Stop: 5.730
Target 1: 5.905
Target 2: 5.995
Target 3: 6.145
Entry: 5.830
Stop: 5.730
Target 1: 5.905
Target 2: 5.995
Target 3: 6.145
No Trade / Update (Test)
No trade, YM's broke before we got an entry bar. Only other chart that shows interest is natural gas. After the report came out we had a spike to the upside. Since then we have had very tight consolidation in a bull flag. Will might have a long setup. Stay tuned.
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
Typically we don't like to see the S&P run up to and then consolidate just under a key high. Since other markets managed to forge new 2009 highs yesterday, part of the technical disappointment toward the S&P is erased. We suspect a delay in a Citigroup stock offering, off weak pricing is at least partially behind the weaker overnight equity market action. One might also blame the raising of the US Debt ceiling, as a negative especially since US officials are also committing the US to carbon omissions limits in Copenhagen, as that is another potential complication for US businesses. While the market simply yawned at the FOMC statement yesterday, we get the sense that the maintenance of low rates is losing its bullish influence on stock prices. In other words, the stock market seems to be transitioning into a stance where real growth progression is needed to fuel stock prices higher and that in turn means that the market probably needs good scheduled data flow. While it might not be a distinct line in the sand, the equity markets need to see the potential for an improvement in top line sales and that might only come in the wake of noted momentum in growth. Therefore, good numbers are now probably good for the stock market, as the markets have to know that a rate hike is coming sometime in 2010.
Dow:
With a definitive downside failure on the charts overnight, it is clear that the upper end of the market is in the midst of a failure. At least at this hour, the downside action appears to be devoid of anxiety and is probably the result of a simple sell the rumor reaction to the FOMC statement. Certainly seeing the Citigroup stock sale delayed because of weak bids is an undermine for blue chip stock prices and that in conjunction with classic technical balancing needs could be a justification for a near term slide down to the 10,250 level in the March Mini Dow.
S&P:
The S&P failed to make a new high for the year yesterday and that turns the technical picture against the bull camp into the Thursday morning US trade. Unfortunately up trend channel support isn't seen until the 1085.90 area today and that support only climbs up to 1087.90 on Friday. As suggested in the introduction, this market seems to be transitioning to a market that needs good numbers, instead of a market that fears good numbers and higher interest rates. Therefore traders need to watch the reaction to the claims data closely to confirm if that a shift has indeed been made. At least for the early going today, the market looks to slide unless the data window causes a recovery back above 1103.
NASDAQ:
After a very distinct pattern of higher highs, the March Nasdaq has forged a clear reversal on the charts overnight. However, unless there is a more serious story that has yet to hit the headlines, we think that the downside action will be orderly and limited in scope. Unfortunately up trend channel support in the March Nasdaq is seen all the way down at 1765.70 today and that support only rises to 1768.80 on Friday. We are somewhat surprised that the holiday shopping season has progressed so far, without much in the way of favorable tech sector sales news and that might also be part of the reason behind the slide in prices
Gold:
At least in the near term, the gold market seems to be off balance because of the stellar rise in the Dollar. The bear camp will suggest that a quasi double high up around the $1,142 level is a negative technical signal, while the bull camp might retain some confidence, as long as the February gold contract manages to hold above this week's consolidation lows of $1,111.70. One might have expected up beat US Fed dialogue on the state of the US economy to be supportive of gold prices yesterday, especially if the on hold stance allows the anemic US recovery to gain more momentum before the Fed taps on the brakes. With slightly weaker global equity prices this morning, it is possible that some classic macro economic type liquidation is being seen in gold in addition to currency related liquidation pressure. Apparently the gold market wasn't that interested in favorable Indian gold import data released overnight for the first half of December and that in turn highlights the dominance of the Dollar action on gold market sentiment. While the bias appears to be pointing downward in gold this morning, the gold bulls wouldn't have benefited from US Fed hints at higher rates yesterday. Eventually seeing the Fed remain on hold could be a benefit to the gold bull camp.
Silver:
Like the gold market, the March silver contract has also forged a quasi double top on the charts and has fallen back sharply. Clearly the root of the liquidation pressure this morning stems from the ongoing rise in the US Dollar, but it is also possible that weakness in global equities, weakness in copper and even weakness in the energy complex is stoking the bear case into the early Thursday US trade. Since silver avoided the type of historic pricing seen in the gold market over the last several months, it is possible that technical corrective action in silver ahead will be less severe. With silver at times over the last six months, holding back from gains because of its industrial link, it is now possible that favorable US economic numbers ahead might actually serve to provide a measure of support to silver prices. The bear camp is also pointing out the double failure to regain the 50 day moving average earlier this week, while the bull camp is hopeful that consolidation support on the charts down at $17.13 will be able to support this market. While the silver trade hasn't paid that much attention to the ebb and flow of silver warehouse exchange stocks, the market was presented with a moderately negative rise in silver stocks from yesterday afternoon. On the other hand, since the market doesn't seem to be paying that much attention to physical supply side developments, it is also possible that the silver trade won't be able to garner any support from overnight news that Mexican October silver production declined by 5.6% on a year over year basis. Like gold, the silver bulls need to see favorable US numbers ahead to provide an offset the rising Dollar.
Crude Oil:
The crude oil market has given back a portion of yesterday's gains in the overnight trade under pressure from a sharp rally in the dollar while the market may be rethinking yesterday's bullish reaction to the inventory data. Crude oil fell back as the Dollar gained diminishing the appeal of oil as an alternative investment and inflation hedge. Year end positioning and safe haven buying tied to a credit downgrade for Greece seems to be behind the dollar's rally and crude oil is under pressure as investors scale back risk. But we also suspect the oil market may be undermined by expectations for the Fed to start tightening rates sooner than expected since the FOMC statement acknowledged that economic conditions show signs of improving while reiterating the Fed's plan to withdraw its special lending programs early next year which suggests tightening liquidity conditions. But it's also likely that the oil market is under pressure since taking a second look at the inventory report reveals several bearish indicators. While the market rallied yesterday off the headline that oil stocks fell 3.6 million barrels, a portion of the decline is likely due to refiners making inventory adjustments for year end tax reasons. In fact, with the refinery operating rate dipping below 80% and oil imports down sharply, this setup clearly shows oil demand remains weak which is confirmed by the EIA reporting total product demand over the past four weeks was down 1.7% compared to year ago. The low US refinery operating rate also suggests oil stocks could start building again in the New Year. News that Japan's second largest refinery may close and idle facilities may be further undermining the global demand outlook for oil. While the fundamental setup for oil still isn't particularly strong, the market still shows signs of being technically oversold after breaking sharply from the early December high. Therefore, we suspect more intense pressure from outside markets may be necessary to pressure February crude oil back below chart support at $73.07. Seeing good readings onjobless claims and leading indicators today is more likely to pressure oil than be supportive if the Dollar strengthens off the news. On the other hand, if the dollar starts to give up its early gains, there may still be enough short covering potential for February crude oil to make another run at the $75 resistance level. Escalating geopolitical tensions with Iran is another wild card that could potentially add risk premium support to oil prices. The bears have the early edge, but follow selling will likely key off the Dollar's direction.
Natural Gas:
February natural gas is holding near recent highs and given the cold weather forecast through at least the end of the month we suspect the market has a bit more upside potential. Natural gas should be underpinned since most weather forecasters are predicting below normal temperatures in the Northeast through December 31st with temperatures at times tuning frigid in the Midwest over the next two weeks. The cold start to the winter season will boost heating demand and likely result in above average draw downs in fuel stocks over the next several weeks. It also looks as if the natural gas market is being supported by the economic news which has mostly come in stronger than expected this week. With the Fed keeping interest rates low and confirming conditions are improving, this outlook may begin to lift market sentiment for a recovery in industrial fuel demand. Today's report on jobless claims and leading indicators will give the market some additional economic insight. But the key factor influencing trade will be today's storage report with most traders expecting a 178 bcf decline in stocks which would be larger than the 116 bcf decline last year and the 5 year average draw of 127 bcf. However, the recent gains in February natural gas suggest the market has likely priced in a fairly hefty decline in storage. And with the market running into tough resistance near $5.62, it might take a bigger than expected storage decline in order for February natural gas to break out above this resistance level. With natural gas supplies still near record levels, the market will need a sustained period of below normal temperatures in order to keep the uptrend in tact. So as long as the cold weather forecast holds, we suspect natural gas will likely find good buying interest on price dips to limit losses while a move over $5.62 could inspire more aggressive chart based buying. Overhead resistance for February natural gas comes in at $5.62 then $5.76 and above there near $5.85 with support between $5.46 and $5.41. If the cold temperature forecast extends into January, we suspect February natural gas has a chance to rally back to the $6.00 price level.
Typically we don't like to see the S&P run up to and then consolidate just under a key high. Since other markets managed to forge new 2009 highs yesterday, part of the technical disappointment toward the S&P is erased. We suspect a delay in a Citigroup stock offering, off weak pricing is at least partially behind the weaker overnight equity market action. One might also blame the raising of the US Debt ceiling, as a negative especially since US officials are also committing the US to carbon omissions limits in Copenhagen, as that is another potential complication for US businesses. While the market simply yawned at the FOMC statement yesterday, we get the sense that the maintenance of low rates is losing its bullish influence on stock prices. In other words, the stock market seems to be transitioning into a stance where real growth progression is needed to fuel stock prices higher and that in turn means that the market probably needs good scheduled data flow. While it might not be a distinct line in the sand, the equity markets need to see the potential for an improvement in top line sales and that might only come in the wake of noted momentum in growth. Therefore, good numbers are now probably good for the stock market, as the markets have to know that a rate hike is coming sometime in 2010.
Dow:
With a definitive downside failure on the charts overnight, it is clear that the upper end of the market is in the midst of a failure. At least at this hour, the downside action appears to be devoid of anxiety and is probably the result of a simple sell the rumor reaction to the FOMC statement. Certainly seeing the Citigroup stock sale delayed because of weak bids is an undermine for blue chip stock prices and that in conjunction with classic technical balancing needs could be a justification for a near term slide down to the 10,250 level in the March Mini Dow.
S&P:
The S&P failed to make a new high for the year yesterday and that turns the technical picture against the bull camp into the Thursday morning US trade. Unfortunately up trend channel support isn't seen until the 1085.90 area today and that support only climbs up to 1087.90 on Friday. As suggested in the introduction, this market seems to be transitioning to a market that needs good numbers, instead of a market that fears good numbers and higher interest rates. Therefore traders need to watch the reaction to the claims data closely to confirm if that a shift has indeed been made. At least for the early going today, the market looks to slide unless the data window causes a recovery back above 1103.
NASDAQ:
After a very distinct pattern of higher highs, the March Nasdaq has forged a clear reversal on the charts overnight. However, unless there is a more serious story that has yet to hit the headlines, we think that the downside action will be orderly and limited in scope. Unfortunately up trend channel support in the March Nasdaq is seen all the way down at 1765.70 today and that support only rises to 1768.80 on Friday. We are somewhat surprised that the holiday shopping season has progressed so far, without much in the way of favorable tech sector sales news and that might also be part of the reason behind the slide in prices
Gold:
At least in the near term, the gold market seems to be off balance because of the stellar rise in the Dollar. The bear camp will suggest that a quasi double high up around the $1,142 level is a negative technical signal, while the bull camp might retain some confidence, as long as the February gold contract manages to hold above this week's consolidation lows of $1,111.70. One might have expected up beat US Fed dialogue on the state of the US economy to be supportive of gold prices yesterday, especially if the on hold stance allows the anemic US recovery to gain more momentum before the Fed taps on the brakes. With slightly weaker global equity prices this morning, it is possible that some classic macro economic type liquidation is being seen in gold in addition to currency related liquidation pressure. Apparently the gold market wasn't that interested in favorable Indian gold import data released overnight for the first half of December and that in turn highlights the dominance of the Dollar action on gold market sentiment. While the bias appears to be pointing downward in gold this morning, the gold bulls wouldn't have benefited from US Fed hints at higher rates yesterday. Eventually seeing the Fed remain on hold could be a benefit to the gold bull camp.
Silver:
Like the gold market, the March silver contract has also forged a quasi double top on the charts and has fallen back sharply. Clearly the root of the liquidation pressure this morning stems from the ongoing rise in the US Dollar, but it is also possible that weakness in global equities, weakness in copper and even weakness in the energy complex is stoking the bear case into the early Thursday US trade. Since silver avoided the type of historic pricing seen in the gold market over the last several months, it is possible that technical corrective action in silver ahead will be less severe. With silver at times over the last six months, holding back from gains because of its industrial link, it is now possible that favorable US economic numbers ahead might actually serve to provide a measure of support to silver prices. The bear camp is also pointing out the double failure to regain the 50 day moving average earlier this week, while the bull camp is hopeful that consolidation support on the charts down at $17.13 will be able to support this market. While the silver trade hasn't paid that much attention to the ebb and flow of silver warehouse exchange stocks, the market was presented with a moderately negative rise in silver stocks from yesterday afternoon. On the other hand, since the market doesn't seem to be paying that much attention to physical supply side developments, it is also possible that the silver trade won't be able to garner any support from overnight news that Mexican October silver production declined by 5.6% on a year over year basis. Like gold, the silver bulls need to see favorable US numbers ahead to provide an offset the rising Dollar.
Crude Oil:
The crude oil market has given back a portion of yesterday's gains in the overnight trade under pressure from a sharp rally in the dollar while the market may be rethinking yesterday's bullish reaction to the inventory data. Crude oil fell back as the Dollar gained diminishing the appeal of oil as an alternative investment and inflation hedge. Year end positioning and safe haven buying tied to a credit downgrade for Greece seems to be behind the dollar's rally and crude oil is under pressure as investors scale back risk. But we also suspect the oil market may be undermined by expectations for the Fed to start tightening rates sooner than expected since the FOMC statement acknowledged that economic conditions show signs of improving while reiterating the Fed's plan to withdraw its special lending programs early next year which suggests tightening liquidity conditions. But it's also likely that the oil market is under pressure since taking a second look at the inventory report reveals several bearish indicators. While the market rallied yesterday off the headline that oil stocks fell 3.6 million barrels, a portion of the decline is likely due to refiners making inventory adjustments for year end tax reasons. In fact, with the refinery operating rate dipping below 80% and oil imports down sharply, this setup clearly shows oil demand remains weak which is confirmed by the EIA reporting total product demand over the past four weeks was down 1.7% compared to year ago. The low US refinery operating rate also suggests oil stocks could start building again in the New Year. News that Japan's second largest refinery may close and idle facilities may be further undermining the global demand outlook for oil. While the fundamental setup for oil still isn't particularly strong, the market still shows signs of being technically oversold after breaking sharply from the early December high. Therefore, we suspect more intense pressure from outside markets may be necessary to pressure February crude oil back below chart support at $73.07. Seeing good readings onjobless claims and leading indicators today is more likely to pressure oil than be supportive if the Dollar strengthens off the news. On the other hand, if the dollar starts to give up its early gains, there may still be enough short covering potential for February crude oil to make another run at the $75 resistance level. Escalating geopolitical tensions with Iran is another wild card that could potentially add risk premium support to oil prices. The bears have the early edge, but follow selling will likely key off the Dollar's direction.
Natural Gas:
February natural gas is holding near recent highs and given the cold weather forecast through at least the end of the month we suspect the market has a bit more upside potential. Natural gas should be underpinned since most weather forecasters are predicting below normal temperatures in the Northeast through December 31st with temperatures at times tuning frigid in the Midwest over the next two weeks. The cold start to the winter season will boost heating demand and likely result in above average draw downs in fuel stocks over the next several weeks. It also looks as if the natural gas market is being supported by the economic news which has mostly come in stronger than expected this week. With the Fed keeping interest rates low and confirming conditions are improving, this outlook may begin to lift market sentiment for a recovery in industrial fuel demand. Today's report on jobless claims and leading indicators will give the market some additional economic insight. But the key factor influencing trade will be today's storage report with most traders expecting a 178 bcf decline in stocks which would be larger than the 116 bcf decline last year and the 5 year average draw of 127 bcf. However, the recent gains in February natural gas suggest the market has likely priced in a fairly hefty decline in storage. And with the market running into tough resistance near $5.62, it might take a bigger than expected storage decline in order for February natural gas to break out above this resistance level. With natural gas supplies still near record levels, the market will need a sustained period of below normal temperatures in order to keep the uptrend in tact. So as long as the cold weather forecast holds, we suspect natural gas will likely find good buying interest on price dips to limit losses while a move over $5.62 could inspire more aggressive chart based buying. Overhead resistance for February natural gas comes in at $5.62 then $5.76 and above there near $5.85 with support between $5.46 and $5.41. If the cold temperature forecast extends into January, we suspect February natural gas has a chance to rally back to the $6.00 price level.
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