I was tracking a few setups in the last hour but decided to pass. I did not want to get stuck with an open position over the weekend. And with the way the market just bounced to the upside I'm glad I did. We came back with a small winner this morning to snap that losing streak and overall it has been a very profitable month. I would have liked to finish a little stronger but it's all about the long haul. So we will be back on Monday rested, relaxed, refreshed, and rarring to go for another run as my friend Ben would say ;) So I hope everyone has a great weekend. Take care.
Numbers for the Month of JAN
Ex-1 = $3225.00 (+32.25% on our $10,000 deposit)
Ex-2 = $4820.00 (+48.20% on our $10,000 deposit)
1st Targets = 12 for 17 (70.59%)
2nd Targets = 6 for 17 (35.29%)
3rd Targets = 4 for 17 (23.53%)
Friday, January 29, 2010
GC Canceled
No Trade, moved back up. I'm worried we are going to be last to the party like yesterday. I've been working real hard to get into another trade but it seems to be getting choppy. Moving to SOH for the lunch time session and we'll see if we can grab something before the close.
Gold Short Entry
Symbol: GC
Chart: 5m
Entry: Sell @ 1075.6
Stop: 1078.2
Target 1: 1073.2
Target 2: 1070.2
Target 3: 1065.4
Chart: 5m
Entry: Sell @ 1075.6
Stop: 1078.2
Target 1: 1073.2
Target 2: 1070.2
Target 3: 1065.4
Crude Long Entry
Symbol: QM
Chart: 5m
Entry: Buy Stop @ 74.350
Stop: 73.650
Target 1: 74.675
Target 2: 75.275
Target 3: 76.275
Chart: 5m
Entry: Buy Stop @ 74.350
Stop: 73.650
Target 1: 74.675
Target 2: 75.275
Target 3: 76.275
ES Stopped Out
So close on the 2nd target. Missed by 1 tick. Locals couldn't push it through 1093 and then began to sell. We will watch for another entry. Small gain to start the day.
Out @ 1088.00
Out @ 1088.00
ES 1st Target Hit
Looking good, locals in the S&P pit are all long trying to bid it up.
Out @ 1090.50
2nd target is @ 1093.50
Move stop to breakeven @ 1088.25
Out @ 1090.50
2nd target is @ 1093.50
Move stop to breakeven @ 1088.25
ES Long Entry
Symbol: ES
Chart: 5m
Entry: Buy Stop @ 1088.75
Stop: 1085.25
Target 1: 1090.50
Target 2: 1093.50
Target 3: 1098.50
Chart: 5m
Entry: Buy Stop @ 1088.75
Stop: 1085.25
Target 1: 1090.50
Target 2: 1093.50
Target 3: 1098.50
QM Long Entry
Symbol: QM
Chart: 5m
Entry: Buy Stop @ 74.400
Stop: 74.025
Target 1: 74.725
Target 2: 75.125
Target 3: 75.800
Chart: 5m
Entry: Buy Stop @ 74.400
Stop: 74.025
Target 1: 74.725
Target 2: 75.125
Target 3: 75.800
Thursday, January 28, 2010
NQ Stopped Out
That's it for today. That last one really took the wind out. We missed that 1st target by 2 ticks. The market is too undicided this afternoon and I don't want to risk any more capital. We'll try and come back strong tomorrow.
Out @ 1776.00
Out @ 1776.00
NQ Short Entry
Symbol: NQ
Chart: 5m
Entry: Sell Stop @ 1768.00
Stop: 1776.00
Target 1: 1760.50
Target 2: 1753.00
Target 3: 1740.75
Chart: 5m
Entry: Sell Stop @ 1768.00
Stop: 1776.00
Target 1: 1760.50
Target 2: 1753.00
Target 3: 1740.75
YM Stopped Out
Well that was short lived. Market was just waiting for us to get in and then reverse the internals on us. That's why I kept the stop real tight. Small loss on this one and we'll look for another entry. Tracker will be updated soon.
Out @ 10054
Out @ 10054
YM Short Entry
Symbol: YM
Chart: 5m
Entry: Sell Stop @ 10031
Stop: 10054
Target 1: 10010
Target 2: 9983
Target 3: 9940
Chart: 5m
Entry: Sell Stop @ 10031
Stop: 10054
Target 1: 10010
Target 2: 9983
Target 3: 9940
Watching Crude
Market is now selling off. Thats why I always wait for the bell. I'm looking at a short on QM on the 1h chart. Keep an eye on this. We didn't get the down move on this yesterday but I'm still seeing the same technicals on the higher time frames.
Morning Update
Financials look set for an up move. I'm tracking longs on the YM & ES but I hate to enter before the open due to the volatility risk. Metals are making a up move after a choppy session in the early hours. Oil seems to be doing the opposite. And we got Nat Gas storage numbers at 9:30am. So we will wait till after the report for any plays there.
Wednesday, January 27, 2010
QM Stopped Out
We couldn't get the downside move in the after hour session like I had hoped for. We take our 3rd loss and a hit of $733.50 after commissions. We'll be back tomorrow to see if we can get back on track.
Crude Short Entry
Symbol: QM
Chart: 15m
Entry: Sell Stop @ 73.600
Stop: 74.050
Target 1: 72.875
Target 2: 72.275
Target 3: 71.275
Chart: 15m
Entry: Sell Stop @ 73.600
Stop: 74.050
Target 1: 72.875
Target 2: 72.275
Target 3: 71.275
Mid Morning Update
With the FOMC statement on the books for this afternoon the markets havn't shown any direction so its been SOH so far this morning. Nat Gas has continued its sell off so we will be keeping an eye on this for a possible short. Other than that we shall watch and wait.
Tuesday, January 26, 2010
TF Short Entry
Symbol: TF
Chart: 30m
Entry: Sell Stop @ 613.0
Stop: 616.7
Target 1: 611.4
Target 2: 608.2
Target 3: 603.0
Chart: 30m
Entry: Sell Stop @ 613.0
Stop: 616.7
Target 1: 611.4
Target 2: 608.2
Target 3: 603.0
Watching the metals
Well we didn't get the setup or move lower in the markets. I'm looking at gold and silver at the moment. Silver is lagging this move up so we shall see if it sets up for a short. Other than that its SOH for the time being. Internals are flat and are not confirming any move to the upside.
Morning Update
I'm looking at a short play on the 30m of YM, ES, & TF. The market looks set to push lower in the early going. We got consumer confidence at 9am cst so keep an eye on that. It's a reall shame we got taken out by a few ticks last night cause the big move down happened right after. That's always the way it goes but or first job is to lock in profit and protect our capital. So lets see if we can grab another chunk today. And as always if I can get my guidance report I'll post it up. Stay tuned.
Monday, January 25, 2010
YM Stopped Out
Well we couldn't get a move down in the over night session i just got stopped out by a few ticks with a touch of the 15m 50sma again.
Out @ 10175
Back at it tomorrow. Tracker will be up to date soon. Good night!
Out @ 10175
Back at it tomorrow. Tracker will be up to date soon. Good night!
YM Target #1 Hit
Very nice move down at the close to hit our first target.
We are out @ 10140
2nd target is @ 10105
Move your stop to breakeven @ 10175
Great start to the week. Lets hope AAPL can push the market lower in the after hours.
We are out @ 10140
2nd target is @ 10105
Move your stop to breakeven @ 10175
Great start to the week. Lets hope AAPL can push the market lower in the after hours.
YM Update
The dow and the rut are the laggers of the 4 with this move up in the last few bars. We will work this trade a little while longer but if we continue up through the 15m 50sma then I will cancel it.
YM Short Entry
Symbol: YM
Chart: 15m
Entry: Sell Stop @ 10175
Stop: 10209
Target 1: 10140
Target 2: 10105
Target 3: 10048
Chart: 15m
Entry: Sell Stop @ 10175
Stop: 10209
Target 1: 10140
Target 2: 10105
Target 3: 10048
SOH
So far we have nothing doing. I'm just seeing to much chop to jump in to anything. Internals are not giving anything away so we might not have any plays until the afternoon.
Morning Update
Good morning everyone. Well the market made a gap to the upside but so far we have seen no follow through so that can't be a good sign for the bulls. Everything I'm watching is still in chop mode. We shall see if we can get a trend going in something. It looks like my data provider made some progress. I have friday's update listed when I was out of the office but I'm still waiting for today's. I'll post it up as soon as I get it.
Friday, January 22, 2010
SI 3rd Target Hit!
Well that turned out to be our best trade yet. In our Ex-2, we've hit four 3rd target at a rate of 33.33%. This is much higher than I expected. I hope everyone has been able to put a nice chunk of change in their account. Spread sheets are up to date and our P&L is below. Have a great weekend and we'll be back at on Monday.
SI totals:
Ex-1 = $1429.00
Ex-2 = $2629.00
P&L Totals:
Ex-1 = $4481.50 (+44.82%)
Ex-2 = $6241.00 (+66.41%)
SI totals:
Ex-1 = $1429.00
Ex-2 = $2629.00
P&L Totals:
Ex-1 = $4481.50 (+44.82%)
Ex-2 = $6241.00 (+66.41%)
SI and Morning Update
Well we caught some good fortune in the overnight sessions. We missed being stopped out by 1 tick. How often does that happen? Ex-2 is still short 1 contract. Let's see if we can get another move down and hit our 3rd target.
Today I will be at the Options for Traders workshop in dowtown Houston presented by Think Or Swim. If anyone is in the area we'd love to have you come on down. It's at the Renaissance Houston Hotel Greenway Plaza. So if the hotel has wifi access I will be logged in and keeping an eye on the markets.
After the SI trade we've had another profitable week so I won't try to push anything today if it's not there.
Today I will be at the Options for Traders workshop in dowtown Houston presented by Think Or Swim. If anyone is in the area we'd love to have you come on down. It's at the Renaissance Houston Hotel Greenway Plaza. So if the hotel has wifi access I will be logged in and keeping an eye on the markets.
After the SI trade we've had another profitable week so I won't try to push anything today if it's not there.
Thursday, January 21, 2010
SI 2nd Target Hit!
We just hit the 2nd target and are out at 17.365.
3rd target for the Ex-2 traders is at 17.220 and keep your stop at 17.525
Tracker will be up to date soon.
3rd target for the Ex-2 traders is at 17.220 and keep your stop at 17.525
Tracker will be up to date soon.
SI 1st Target Hit!
WOW! What a struggle. At $25 a tick per contract I still hold my breath a little with silver. When we missed the 1st target by 1 tick just after 1pm cst I was a bit upset to say the least. But we hung in there taking in a nice profit. The market looks set to sell into the close and the metals should follow it. The Dollar has seen an uptick heading into the close as well so lets see if we can get the next target.
2nd Target is @ 17.370
Move stop to breakeven @ 17.525
2nd Target is @ 17.370
Move stop to breakeven @ 17.525
SI Short Entry
Symbol: SI
Chart: 5m
Entry: Sell Stop @ 17.530
Stop: 17.615
Target 1: 17.460
Target 2: 17.340
Target 3: 16.9220
Chart: 5m
Entry: Sell Stop @ 17.530
Stop: 17.615
Target 1: 17.460
Target 2: 17.340
Target 3: 16.9220
SI Short Entry
Symbol: SI
Chart: 5m
Entry: Sell Stop @ 17.455
Stop: 17.560
Target 1: 17.360
Target 2: 17.190
Target 3: 16.915
Chart: 5m
Entry: Sell Stop @ 17.455
Stop: 17.560
Target 1: 17.360
Target 2: 17.190
Target 3: 16.915
Bout that time.....
Just about sandwich time out on the east coast. Everything is in free fall. So until we get some kind of new setups we will sit out and just watch the carnage. Follow your internals if you plan to trade.
P&L Update
ES trade totals:
Ex-1 = $466.50
Ex-2 = $989.50
Total P&L
Ex-1 = $3052.50 (+30.53%)
Ex-2 = $3612.00 (+36.12%)
Ex-1 = $466.50
Ex-2 = $989.50
Total P&L
Ex-1 = $3052.50 (+30.53%)
Ex-2 = $3612.00 (+36.12%)
ES 3rd Target!
Out @ 1121.75
Wow, what a sell off!!!
They are still selling. JP Morgan coming in as a seller now.
Wow, what a sell off!!!
They are still selling. JP Morgan coming in as a seller now.
ES 2nd target hit!
Out @ 1128.25
3rd target is 1122.00
Keep stop @ breakeven.
Nice little runner we got here!
3rd target is 1122.00
Keep stop @ breakeven.
Nice little runner we got here!
ES 1st Target Hit
Ok, now we got it.
Out @ 1132.00
2nd Target is 1128.25
Move stop to breakeven @ 1134.00
Local makers in the S&P pit are currently stuck long from up above. We've had reatil paper coming in with big sell orders! A big stop was hit of 300 cars.
Out @ 1132.00
2nd Target is 1128.25
Move stop to breakeven @ 1134.00
Local makers in the S&P pit are currently stuck long from up above. We've had reatil paper coming in with big sell orders! A big stop was hit of 300 cars.
ES Update
One of my accounts hit target #1 but the other did not fill so I'm going to continue to track this as no targets hit yet.
ES Short Entry
Symbol: ES
Chart: 15m
Entry: Sell Stop 1134
Stop: 1138.50
Target 1: 1132
Target 2: 1128.50
Target 3: 1122
Chart: 15m
Entry: Sell Stop 1134
Stop: 1138.50
Target 1: 1132
Target 2: 1128.50
Target 3: 1122
Morning Update
Good morning everyone. Still no news from my data provider so looks like another day without our guidance update. Early morning im looking at shorts on the financials, shorts on the metals and maybe a long in nat gas. Let's try and finish the week strong.
Philly Fed report is out at 9am cst.
Philly Fed report is out at 9am cst.
Wednesday, January 20, 2010
Wrap Up
Ok that's going to be it for today. Looks like everything is consolidating and retracing a bit. My data provider is working on the issues with my guidance report. I hope to have this resloved for tomorrow.
Here are our P&L totals after today's small gain.
Ex-1 = $2586.00 (+25.86%)
Ex-2 = $2622.50 (+26.23%)
Here are our P&L totals after today's small gain.
Ex-1 = $2586.00 (+25.86%)
Ex-2 = $2622.50 (+26.23%)
QM Canceled
I'm taking this off. This downtrend feels like it could be running out of steam and the dollar looks like it could have a pull back. We will wait for a better setup. We got a small chunk out of it and i don't want to get caught if everything is about to change direction.
Here are the internals with the dollar in the bottom right corner.
Here are the internals with the dollar in the bottom right corner.
QM Entry
Symbol: QM
Chart: 5m
Entry: Sell Stop @ 77.525
Stop: 77.950
Target 1: 77.350
Target 2: 77.150
Target 3: 76.725
Chart: 5m
Entry: Sell Stop @ 77.525
Stop: 77.950
Target 1: 77.350
Target 2: 77.150
Target 3: 76.725
QM Stopped Out
Well like I said, 1st target and then stopped is very common. Nice little gain and we will look to short it again if we get another entry. Keep it on your screen.
QM Target #1 Hit
We just hit our 1st target. Out @ 77.350. Let's see if we can get some more downside pressure.
2nd target is 77.000
ove your stop to breakeven @ 77.600
2nd target is 77.000
ove your stop to breakeven @ 77.600
QM Short Triggered
Our sell stop was hit. We are short 3 @ 77.600
1st Target is 77.350
Stop is 78.025
1st Target is 77.350
Stop is 78.025
QM Entry
Symbol: QM
Chart: 5m
Entry: Sell Stop @ 77.600
Stop: 78.025
Target 1: 77.350
Target 2: 77.000
Target 3: 76.425
Chart: 5m
Entry: Sell Stop @ 77.600
Stop: 78.025
Target 1: 77.350
Target 2: 77.000
Target 3: 76.425
Nat Gas Update
I'm getting entries for QG but the ROI is just not there so I'm going to pass on this one.
Watching Nat Gas
Still no update, trying to resolve this with my data provider. Looking at a short on Nat Gas (QG) on the 5m. Keep an eye on this.
Morning Update
I'm still having problems with my morning report. Waiting to get an update in the next 30mins. So far no setups as of yet. Market is down, we'll see wich way we go from here. Watch your internals.
Tuesday, January 19, 2010
QM Stopped Out
Well like i said, that was going to be too tight, but after the loss this morning I wanted to make sure we got a small chunk back. The bad fill did not help our cause.
Out at 78.750
Updating the tracker now.
Out at 78.750
Updating the tracker now.
Target #1 Hit
QM Target #1 Hit @ 78.900
Target #2 is @ 79.175
Move stop to breakeven @ 78.750
The stop is really tight, fingered crossed we move up quick.
Target #2 is @ 79.175
Move stop to breakeven @ 78.750
The stop is really tight, fingered crossed we move up quick.
QM Entry
Symbol: QM
Chart: 5m
Entry: Buy Stop @ 78.700
Stop: 78.425
Target 1: 78.900
Target 2: 79.175
Target 3: 79.625
Chart: 5m
Entry: Buy Stop @ 78.700
Stop: 78.425
Target 1: 78.900
Target 2: 79.175
Target 3: 79.625
Watching Crude
Looking at a long setup on the 5m for QM. Keep an eye out. Lets see if we can get a winner to end the day.
GC Stopped Out
Well not the start to the week we were looking for.
Stopped @ 1135.50
Loss of $960.00
Tracker will be up to date shortly.
Stopped @ 1135.50
Loss of $960.00
Tracker will be up to date shortly.
GC Trade Entry
Symbol: GC
Chart: 15m
Entry: Sell Stop @ 1132.2
Stop: 1135.6
Target 1: 1129.4
Target 2: 1124.9
Target 3: 1117.6
Chart: 15m
Entry: Sell Stop @ 1132.2
Stop: 1135.6
Target 1: 1129.4
Target 2: 1124.9
Target 3: 1117.6
Watching Gold
I'm looking at a possible short setup taking shape on the 15m chart on GC. Keep an eye on this.
Morning Update
Good morning. I'm still waiting for todays Market Guidance info to come out. When I get the report I will post it up. Not seeing anything setting up just yet. We'll see how the market reacts in the early going.
Friday, January 15, 2010
Great Start!
Alright, i think that's going to be it for the day. Everying is selling off and I don't want to chase. No need to give anything back on a friday before the long weekend. We've had a fantastic first two weeks. The trade tracker is up to date. I hope everyone has a great holiday weekend and we'll get back at it on Tuesday. Cheers!
P&L Totals
Futures Dpt:
Ex-1 = $3,438.00
Ex-2 = $3,593.00
Swing Dpt:
$1,340.00
P&L Totals
Futures Dpt:
Ex-1 = $3,438.00
Ex-2 = $3,593.00
Swing Dpt:
$1,340.00
HE Target Hit!
We just hit our target on our long HE trade in the swing futures department.
We are now flat, out @ 69.750 for a total gain of $1,340.
Great start for this department!
We are now flat, out @ 69.750 for a total gain of $1,340.
Great start for this department!
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
While the S&P didn't manage a new low in the range down recovery move yesterday, it did forge a quasi critical low on the charts and has remained near yesterday's highs into the early Thursday morning trade. While one might have expected the US financial sector to remain weak in the face of the recent announcement to tax financial companies for their TARP use, the market has apparently managed to shift its focus on more positive issues. Apparently the market was lifted by favorable earnings news from Rio Tinto, as that suggests the recent interest in natural resource companies is at least partially justified. However, we also get the sense that the markets are in need of even more favorable macro economic evidence to erase concerns that stock prices are over valued. Certainly the stock market was lifted by the mostly favorable US Federal Reserve Beige Book yesterday afternoon, but the trade also seems to need additional confirmation of progression from the consumer and that could come from the US retail sales report this morning. We suspect that the market will get something supportive from the claims reports, but the real focus might remain on the retail sales reading. With Intel reporting earnings after the close today, the earnings influence looks to be the main focal point into the end of the week. We have to give the bull camp a slight edge this morning, but we see the market as a spoiled child in need of constant support from the US scheduled data flow.
Dow:
Up trend channel resistance is seen today up at 10,669 but to see the Mini Dow run up into that level probably requires a decent sweep of scheduled data, particularly from the retail sales report. One shouldn't fight the up trend bias, but one should be watching the headlines closely for any news that dents macro economic sentiment. In fact, given the discussion of the Greece situation by the EU officials yesterday and seeing a formal ECB meeting today, there could be some credit related concerns coming out of that meeting. Therefore, the bias is up but the failure to hold above 10,600 wouldn't be a favorable technical signal in a market that doesn't appear to have a solid definitive bullish focus.
The market made a new contract high on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside objective is 10727. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 10704 and 10727, while 1st support hits today at 10610 and below there at 10538.
S&P 500:
As suggested already, the S&P managed a quasi critical reversal off the break early in the week, but since that spike down move wasn't a new low for the move, that washout probably didn't totally exhaust the bear camp. Nonetheless the market did correct some of its technically overbought condition and therefore it might not take much in the way of favorable news to see the March S&P make an attempt at the 1150 level. As in other markets, to charge into and sustain new highs probably requires a lift from Intel later today. We would remain bullish toward the S&P, as long as the March S&P manages to hold above 1140.80.
Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The market's short-term trend is positive on the close above the 9-day moving average. The market setup is somewhat negative with the close under the 1st swing support. The near-term upside target is at 116-315. The next area of resistance is around 116-185 and 116-315, while 1st support hits today at 116-010 and below there at 115-280.
NASDAQ:
The Nasdaq seems to have recovered from the Google/China inspired setback. In retrospect, there were other macro economic negatives that added into the correction in the Nasdaq early this week but with Intel earnings due out after the close today, we suspect that investors saw this week's break as a chance to add to their long holdings. Without some fresh major negative headline development, the March Nasdaq might be in a solid technical position to rally to new highs, but that will clearly require a 'beat' on the streets Intel earnings after the bell today. We would remain bullish toward the Nasdaq as long as it manages to hold above 1880 on the charts.
US Dollar:
So far, the Dollar has managed to hold above the prior session's lows. However, despite seeing a somewhat up beat US Federal Reserve Beige Book yesterday, the Dollar just doesn't seem to be in a position to throw off the downward bias, without something very strong from the US data flow. In fact, with a very strong Australian jobs report overnight, the US condition would seem to look a little softer and that probably means that the trade will be a harsh judge of the US scheduled data flow this morning. In other words, seeing a +.3 to +.5 gain in retail sales this morning might not lend any support to the Dollar, while anything weaker than that range, could foster fresh selling of the Dollar. Not surprisingly, the Dollar doesn't even see the new tax on TARP users as a development that shores up the US financial situation and that highlights a trade that is generally spinning developments into a bearish track for the Dollar. In conclusion, assume that the path of least resistance is pointing downward in the Dollar unless there is a headline growth reading that sends US equities into new high ground.
Gold:
Some gold bulls will suggest that the Dollar's recent track below the 77.00 level is fostering ideas that the Dollar remains in a down trend pattern that started back on December 22nd. While the gold market might be supported by news of another year over year 4.9% decline in November South African gold production, that news is partially countervailed by news of an increase in gold production from Fresnillo. While the South African production decline would seem to overshadow a rise in production from a single gold producer, the gold market was also presented with higher output news from Rio Tinto overnight. However, the gold market just hasn't been overly focused on classic supply side developments, as the demand or investment track has typically controlled market sentiment. While some traders are fearful of some type of move from the ECB meeting, it is probably still premature to fret over rising Euro zone rates. In the end, it would probably be a surprise to see the ECB actually move on rates, but it wouldn't be as big of a surprise to see the ECB dialogue toward future rate moves change a little. The 50 day moving average in the April gold today comes in down at $1,132.40.
We continue to have trouble coming up with a scenario where the bulls manage to regain full control of the market in the near term. We can't rule out some moderate strength in gold today on residual Dollar weakness but with the trade starting to fear rate hike action from a number of central banks and the Chinese and Australian central banks seemingly already into a rate hike cycle, we have a sinking feeling toward the gold trend. As suggested earlier this week, inflation almost has to sneak up on the market, or there has to be another serious financial threat to the US, to put the gold bulls back into the driver's seat. We might suggest that longs exit gold futures and use gold calls instead.
Silver:
While the March silver contract has generally managed to respect the even number $18.50 level overnight, there is almost a pattern of lower highs forming on the charts this week. Like the gold market, the silver market was also presented with some classic physical supply side news overnight. However, in the silver market the 4th quarter silver output rise from Fresnillo is a somewhat noted supply figure for the silver trade. However, as in the gold market, the silver trade recently hasn't put a large premium on physical supply side news. With the US Dollar chopping around both sides of unchanged this morning, it is possible that the US scheduled data flow will be an important influence on silver prices this morning. With copper and energy prices showing only marginal early strength today and a host of other physical commodity markets showing initial weakness, one could suggest that silver needs to see favorable US numbers, without a higher US dollar to spark a silver rally today.
As in the gold market, we are having trouble figuring out a way for silver to weave through the current market setup and come away with a definitively bullish track. However, we would hold out some bullish hope that the market will see some strong numbers today or that the Intel earnings after the close will present a more positive macro economic view and that in turn might allow silver to rally. However, the numbers have to be strong enough to fan economic optimism, but not so strong that the Dollar rallies. We are bullish but we have seen much better conditions for the silver bulls than are currently in place.
Crude Oil:
Crude oil prices have been able to bounce a bit in the early overnight action and a portion of the gains are likely based on technical signals with price support also stemming from an improving macro economic view tied to gains in global equities following the rally in the US stock market yesterday. March crude oil showed some technical strength by significantly cutting losses yesterday and holding a test of the 40 day moving average at $78.71. It looks as if some better corporate earnings news along with the Fed's Beige Book report showing economic improvement expanding to more districts helped to improve the macro economic climate to a certain extent and that seemed to be enough to partially offset a very bearish build up in supplies. Part of the recovery in oil prices off yesterday's low may have been tied to some traders coming to the conclusion that China's steps to soak up excess liquidity, which had undermined demand optimism earlier in the week, is just a sign of economic strength and a reflection of the country's robust demand for raw commodities including oil. So far March crude oil has held to a fairly tight range overnight with the upside limited by overhead resistance at $80.75 and the market tentatively holding above retracement support at $79.86. However, we are skeptical of the market's upside potential given that oil supplies are quickly rebuilding this month after refiners drained end of the year supplies for tax reasons. It was particularly bearish to see a 3.7 million barrel rise in oil stocks despite a 1.4% jump in the refinery operating rate. But even a more negative development for crude oil is the build up in product stocks, which suggests fuel demand remains anemic, even at a pinnacle in heating demand. In fact, the EIA reported total product demand over the past four weeks was still down about 1% compared to year ago. Since speculators were likely holding a record net long position in crude at this week's highs, the $5.65 price break may not have been enough to correct the market's extreme overbought condition and that could still be a limiting factor for the bull camp. Therefore, in order to shake off the bearish supply side setup a much more optimistic macro economic view will need to take hold to brighten the outlook for oil demand. In order for March crude oil to make a push above yesterday's high at $81.01 will likely require more upside leadership from equities and better than expected readings in today's reports on weekly jobless claims and retail sales. Otherwise, we see the bearish supply situation having the potential to exert more downward pressure on March crude oil in the short-run that could eventually pull the market back toward key retracement near $77.03.
Natural Gas:
It was a bit surprising to see such a strong recovery bounce in natural gas yesterday, but apparently traders were positioning to possibly see a record fuel draw from storage in today's report. Most traders are expecting fuel stocks to decline by 256 bcf which would be significantly above last year's 88 bcf draw and the 5 year average decline of 76 bcf. But there has been talk that last week's frigid temperatures may result in a 280 bcf draw since there was apparently some well head freezing and power demand reached a winter record last week. A fuel storage drain of that size would exceed the previous record of 274 bcf decline seen in January 2008. But while the initial reaction to a big storage draw may be positive, we remain skeptical of the upside potential for March natural gas given the temperature warm up expected in key heating regions over the next two weeks. Given the pent up trade anticipation, the storage report will certainly set the early tone. A push through overhead resistance at $5.75 could give March natural gas some technical upside traction, but we still see the $6.00 level as a tough ceiling to crack unless optimism toward industrial fuel demand begins to take hold. In recent weeks storage reports have been a bit disappointing and given the above average temperature forecast that will certainly reduce heating demand, seeing a fuel draw under 256 bcf could trigger a sizable price break in March natural gas with the market perhaps giving back a large portion of yesterday's gains.
While the S&P didn't manage a new low in the range down recovery move yesterday, it did forge a quasi critical low on the charts and has remained near yesterday's highs into the early Thursday morning trade. While one might have expected the US financial sector to remain weak in the face of the recent announcement to tax financial companies for their TARP use, the market has apparently managed to shift its focus on more positive issues. Apparently the market was lifted by favorable earnings news from Rio Tinto, as that suggests the recent interest in natural resource companies is at least partially justified. However, we also get the sense that the markets are in need of even more favorable macro economic evidence to erase concerns that stock prices are over valued. Certainly the stock market was lifted by the mostly favorable US Federal Reserve Beige Book yesterday afternoon, but the trade also seems to need additional confirmation of progression from the consumer and that could come from the US retail sales report this morning. We suspect that the market will get something supportive from the claims reports, but the real focus might remain on the retail sales reading. With Intel reporting earnings after the close today, the earnings influence looks to be the main focal point into the end of the week. We have to give the bull camp a slight edge this morning, but we see the market as a spoiled child in need of constant support from the US scheduled data flow.
Dow:
Up trend channel resistance is seen today up at 10,669 but to see the Mini Dow run up into that level probably requires a decent sweep of scheduled data, particularly from the retail sales report. One shouldn't fight the up trend bias, but one should be watching the headlines closely for any news that dents macro economic sentiment. In fact, given the discussion of the Greece situation by the EU officials yesterday and seeing a formal ECB meeting today, there could be some credit related concerns coming out of that meeting. Therefore, the bias is up but the failure to hold above 10,600 wouldn't be a favorable technical signal in a market that doesn't appear to have a solid definitive bullish focus.
The market made a new contract high on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside objective is 10727. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 10704 and 10727, while 1st support hits today at 10610 and below there at 10538.
S&P 500:
As suggested already, the S&P managed a quasi critical reversal off the break early in the week, but since that spike down move wasn't a new low for the move, that washout probably didn't totally exhaust the bear camp. Nonetheless the market did correct some of its technically overbought condition and therefore it might not take much in the way of favorable news to see the March S&P make an attempt at the 1150 level. As in other markets, to charge into and sustain new highs probably requires a lift from Intel later today. We would remain bullish toward the S&P, as long as the March S&P manages to hold above 1140.80.
Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The market's short-term trend is positive on the close above the 9-day moving average. The market setup is somewhat negative with the close under the 1st swing support. The near-term upside target is at 116-315. The next area of resistance is around 116-185 and 116-315, while 1st support hits today at 116-010 and below there at 115-280.
NASDAQ:
The Nasdaq seems to have recovered from the Google/China inspired setback. In retrospect, there were other macro economic negatives that added into the correction in the Nasdaq early this week but with Intel earnings due out after the close today, we suspect that investors saw this week's break as a chance to add to their long holdings. Without some fresh major negative headline development, the March Nasdaq might be in a solid technical position to rally to new highs, but that will clearly require a 'beat' on the streets Intel earnings after the bell today. We would remain bullish toward the Nasdaq as long as it manages to hold above 1880 on the charts.
US Dollar:
So far, the Dollar has managed to hold above the prior session's lows. However, despite seeing a somewhat up beat US Federal Reserve Beige Book yesterday, the Dollar just doesn't seem to be in a position to throw off the downward bias, without something very strong from the US data flow. In fact, with a very strong Australian jobs report overnight, the US condition would seem to look a little softer and that probably means that the trade will be a harsh judge of the US scheduled data flow this morning. In other words, seeing a +.3 to +.5 gain in retail sales this morning might not lend any support to the Dollar, while anything weaker than that range, could foster fresh selling of the Dollar. Not surprisingly, the Dollar doesn't even see the new tax on TARP users as a development that shores up the US financial situation and that highlights a trade that is generally spinning developments into a bearish track for the Dollar. In conclusion, assume that the path of least resistance is pointing downward in the Dollar unless there is a headline growth reading that sends US equities into new high ground.
Gold:
Some gold bulls will suggest that the Dollar's recent track below the 77.00 level is fostering ideas that the Dollar remains in a down trend pattern that started back on December 22nd. While the gold market might be supported by news of another year over year 4.9% decline in November South African gold production, that news is partially countervailed by news of an increase in gold production from Fresnillo. While the South African production decline would seem to overshadow a rise in production from a single gold producer, the gold market was also presented with higher output news from Rio Tinto overnight. However, the gold market just hasn't been overly focused on classic supply side developments, as the demand or investment track has typically controlled market sentiment. While some traders are fearful of some type of move from the ECB meeting, it is probably still premature to fret over rising Euro zone rates. In the end, it would probably be a surprise to see the ECB actually move on rates, but it wouldn't be as big of a surprise to see the ECB dialogue toward future rate moves change a little. The 50 day moving average in the April gold today comes in down at $1,132.40.
We continue to have trouble coming up with a scenario where the bulls manage to regain full control of the market in the near term. We can't rule out some moderate strength in gold today on residual Dollar weakness but with the trade starting to fear rate hike action from a number of central banks and the Chinese and Australian central banks seemingly already into a rate hike cycle, we have a sinking feeling toward the gold trend. As suggested earlier this week, inflation almost has to sneak up on the market, or there has to be another serious financial threat to the US, to put the gold bulls back into the driver's seat. We might suggest that longs exit gold futures and use gold calls instead.
Silver:
While the March silver contract has generally managed to respect the even number $18.50 level overnight, there is almost a pattern of lower highs forming on the charts this week. Like the gold market, the silver market was also presented with some classic physical supply side news overnight. However, in the silver market the 4th quarter silver output rise from Fresnillo is a somewhat noted supply figure for the silver trade. However, as in the gold market, the silver trade recently hasn't put a large premium on physical supply side news. With the US Dollar chopping around both sides of unchanged this morning, it is possible that the US scheduled data flow will be an important influence on silver prices this morning. With copper and energy prices showing only marginal early strength today and a host of other physical commodity markets showing initial weakness, one could suggest that silver needs to see favorable US numbers, without a higher US dollar to spark a silver rally today.
As in the gold market, we are having trouble figuring out a way for silver to weave through the current market setup and come away with a definitively bullish track. However, we would hold out some bullish hope that the market will see some strong numbers today or that the Intel earnings after the close will present a more positive macro economic view and that in turn might allow silver to rally. However, the numbers have to be strong enough to fan economic optimism, but not so strong that the Dollar rallies. We are bullish but we have seen much better conditions for the silver bulls than are currently in place.
Crude Oil:
Crude oil prices have been able to bounce a bit in the early overnight action and a portion of the gains are likely based on technical signals with price support also stemming from an improving macro economic view tied to gains in global equities following the rally in the US stock market yesterday. March crude oil showed some technical strength by significantly cutting losses yesterday and holding a test of the 40 day moving average at $78.71. It looks as if some better corporate earnings news along with the Fed's Beige Book report showing economic improvement expanding to more districts helped to improve the macro economic climate to a certain extent and that seemed to be enough to partially offset a very bearish build up in supplies. Part of the recovery in oil prices off yesterday's low may have been tied to some traders coming to the conclusion that China's steps to soak up excess liquidity, which had undermined demand optimism earlier in the week, is just a sign of economic strength and a reflection of the country's robust demand for raw commodities including oil. So far March crude oil has held to a fairly tight range overnight with the upside limited by overhead resistance at $80.75 and the market tentatively holding above retracement support at $79.86. However, we are skeptical of the market's upside potential given that oil supplies are quickly rebuilding this month after refiners drained end of the year supplies for tax reasons. It was particularly bearish to see a 3.7 million barrel rise in oil stocks despite a 1.4% jump in the refinery operating rate. But even a more negative development for crude oil is the build up in product stocks, which suggests fuel demand remains anemic, even at a pinnacle in heating demand. In fact, the EIA reported total product demand over the past four weeks was still down about 1% compared to year ago. Since speculators were likely holding a record net long position in crude at this week's highs, the $5.65 price break may not have been enough to correct the market's extreme overbought condition and that could still be a limiting factor for the bull camp. Therefore, in order to shake off the bearish supply side setup a much more optimistic macro economic view will need to take hold to brighten the outlook for oil demand. In order for March crude oil to make a push above yesterday's high at $81.01 will likely require more upside leadership from equities and better than expected readings in today's reports on weekly jobless claims and retail sales. Otherwise, we see the bearish supply situation having the potential to exert more downward pressure on March crude oil in the short-run that could eventually pull the market back toward key retracement near $77.03.
Natural Gas:
It was a bit surprising to see such a strong recovery bounce in natural gas yesterday, but apparently traders were positioning to possibly see a record fuel draw from storage in today's report. Most traders are expecting fuel stocks to decline by 256 bcf which would be significantly above last year's 88 bcf draw and the 5 year average decline of 76 bcf. But there has been talk that last week's frigid temperatures may result in a 280 bcf draw since there was apparently some well head freezing and power demand reached a winter record last week. A fuel storage drain of that size would exceed the previous record of 274 bcf decline seen in January 2008. But while the initial reaction to a big storage draw may be positive, we remain skeptical of the upside potential for March natural gas given the temperature warm up expected in key heating regions over the next two weeks. Given the pent up trade anticipation, the storage report will certainly set the early tone. A push through overhead resistance at $5.75 could give March natural gas some technical upside traction, but we still see the $6.00 level as a tough ceiling to crack unless optimism toward industrial fuel demand begins to take hold. In recent weeks storage reports have been a bit disappointing and given the above average temperature forecast that will certainly reduce heating demand, seeing a fuel draw under 256 bcf could trigger a sizable price break in March natural gas with the market perhaps giving back a large portion of yesterday's gains.
YM Trade Entry
Symbol: YM
Chart: 5m
Entry: Sell stop 10631
Stop: 10651
Target 1: 10615
Target 2: 10595
Target 3: 10562
Chart: 5m
Entry: Sell stop 10631
Stop: 10651
Target 1: 10615
Target 2: 10595
Target 3: 10562
Thursday, January 14, 2010
QM Short Entry
Symbol: QM
Chart: 15m
Entry: Sell Limit 79.650
Stop: 80.025
Target 1: 79.400
Target 2: 79.050
Target 3: 78.475
Chart: 15m
Entry: Sell Limit 79.650
Stop: 80.025
Target 1: 79.400
Target 2: 79.050
Target 3: 78.475
HE Stop Update
We have had a fantastic move up in our feb lean hog trade which is currently showing a profit of just over $1000. We will be moving our stop loss up this morning to lock in some of those gains.
Stop is now @ 68.000. This will lock in $640.
Stop is now @ 68.000. This will lock in $640.
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
While the S&P didn't manage a new low in the range down recovery move yesterday, it did forge a quasi critical low on the charts and has remained near yesterday's highs into the early Thursday morning trade. While one might have expected the US financial sector to remain weak in the face of the recent announcement to tax financial companies for their TARP use, the market has apparently managed to shift its focus on more positive issues. Apparently the market was lifted by favorable earnings news from Rio Tinto, as that suggests the recent interest in natural resource companies is at least partially justified. However, we also get the sense that the markets are in need of even more favorable macro economic evidence to erase concerns that stock prices are over valued. Certainly the stock market was lifted by the mostly favorable US Federal Reserve Beige Book yesterday afternoon, but the trade also seems to need additional confirmation of progression from the consumer and that could come from the US retail sales report this morning. We suspect that the market will get something supportive from the claims reports, but the real focus might remain on the retail sales reading. With Intel reporting earnings after the close today, the earnings influence looks to be the main focal point into the end of the week. We have to give the bull camp a slight edge this morning, but we see the market as a spoiled child in need of constant support from the US scheduled data flow.
Dow:
Up trend channel resistance is seen today up at 10,669 but to see the Mini Dow run up into that level probably requires a decent sweep of scheduled data, particularly from the retail sales report. One shouldn't fight the up trend bias, but one should be watching the headlines closely for any news that dents macro economic sentiment. In fact, given the discussion of the Greece situation by the EU officials yesterday and seeing a formal ECB meeting today, there could be some credit related concerns coming out of that meeting. Therefore, the bias is up but the failure to hold above 10,600 wouldn't be a favorable technical signal in a market that doesn't appear to have a solid definitive bullish focus.
The market made a new contract high on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside objective is 10727. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 10704 and 10727, while 1st support hits today at 10610 and below there at 10538.
S&P:
As suggested already, the S&P managed a quasi critical reversal off the break early in the week, but since that spike down move wasn't a new low for the move, that washout probably didn't totally exhaust the bear camp. Nonetheless the market did correct some of its technically overbought condition and therefore it might not take much in the way of favorable news to see the March S&P make an attempt at the 1150 level. As in other markets, to charge into and sustain new highs probably requires a lift from Intel later today. We would remain bullish toward the S&P, as long as the March S&P manages to hold above 1140.80.
Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next downside target is now at 1123.38. The next area of resistance is around 1149.50 and 1155.37, while 1st support hits today at 1133.50 and below there at 1123.38.
NASDAQ:
The Nasdaq seems to have recovered from the Google/China inspired setback. In retrospect, there were other macro economic negatives that added into the correction in the Nasdaq early this week but with Intel earnings due out after the close today, we suspect that investors saw this week's break as a chance to add to their long holdings. Without some fresh major negative headline development, the March Nasdaq might be in a solid technical position to rally to new highs, but that will clearly require a 'beat' on the streets Intel earnings after the bell today. We would remain bullish toward the Nasdaq as long as it manages to hold above 1880 on the charts.
US Dollar:
So far, the Dollar has managed to hold above the prior session's lows. However, despite seeing a somewhat up beat US Federal Reserve Beige Book yesterday, the Dollar just doesn't seem to be in a position to throw off the downward bias, without something very strong from the US data flow. In fact, with a very strong Australian jobs report overnight, the US condition would seem to look a little softer and that probably means that the trade will be a harsh judge of the US scheduled data flow this morning. In other words, seeing a +.3 to +.5 gain in retail sales this morning might not lend any support to the Dollar, while anything weaker than that range, could foster fresh selling of the Dollar. Not surprisingly, the Dollar doesn't even see the new tax on TARP users as a development that shores up the US financial situation and that highlights a trade that is generally spinning developments into a bearish track for the Dollar. In conclusion, assume that the path of least resistance is pointing downward in the Dollar unless there is a headline growth reading that sends US equities into new high ground.
Gold:
Some gold bulls will suggest that the Dollar's recent track below the 77.00 level is fostering ideas that the Dollar remains in a down trend pattern that started back on December 22nd. While the gold market might be supported by news of another year over year 4.9% decline in November South African gold production, that news is partially countervailed by news of an increase in gold production from Fresnillo. While the South African production decline would seem to overshadow a rise in production from a single gold producer, the gold market was also presented with higher output news from Rio Tinto overnight. However, the gold market just hasn't been overly focused on classic supply side developments, as the demand or investment track has typically controlled market sentiment. While some traders are fearful of some type of move from the ECB meeting, it is probably still premature to fret over rising Euro zone rates. In the end, it would probably be a surprise to see the ECB actually move on rates, but it wouldn't be as big of a surprise to see the ECB dialogue toward future rate moves change a little. The 50 day moving average in the April gold today comes in down at $1,132.40.
We continue to have trouble coming up with a scenario where the bulls manage to regain full control of the market in the near term. We can't rule out some moderate strength in gold today on residual Dollar weakness but with the trade starting to fear rate hike action from a number of central banks and the Chinese and Australian central banks seemingly already into a rate hike cycle, we have a sinking feeling toward the gold trend. As suggested earlier this week, inflation almost has to sneak up on the market, or there has to be another serious financial threat to the US, to put the gold bulls back into the driver's seat. We might suggest that longs exit gold futures and use gold calls instead.
Silver:
While the March silver contract has generally managed to respect the even number $18.50 level overnight, there is almost a pattern of lower highs forming on the charts this week. Like the gold market, the silver market was also presented with some classic physical supply side news overnight. However, in the silver market the 4th quarter silver output rise from Fresnillo is a somewhat noted supply figure for the silver trade. However, as in the gold market, the silver trade recently hasn't put a large premium on physical supply side news. With the US Dollar chopping around both sides of unchanged this morning, it is possible that the US scheduled data flow will be an important influence on silver prices this morning. With copper and energy prices showing only marginal early strength today and a host of other physical commodity markets showing initial weakness, one could suggest that silver needs to see favorable US numbers, without a higher US dollar to spark a silver rally today.
As in the gold market, we are having trouble figuring out a way for silver to weave through the current market setup and come away with a definitively bullish track. However, we would hold out some bullish hope that the market will see some strong numbers today or that the Intel earnings after the close will present a more positive macro economic view and that in turn might allow silver to rally. However, the numbers have to be strong enough to fan economic optimism, but not so strong that the Dollar rallies. We are bullish but we have seen much better conditions for the silver bulls than are currently in place.
Crude Oil:
Crude oil prices have been able to bounce a bit in the early overnight action and a portion of the gains are likely based on technical signals with price support also stemming from an improving macro economic view tied to gains in global equities following the rally in the US stock market yesterday. March crude oil showed some technical strength by significantly cutting losses yesterday and holding a test of the 40 day moving average at $78.71. It looks as if some better corporate earnings news along with the Fed's Beige Book report showing economic improvement expanding to more districts helped to improve the macro economic climate to a certain extent and that seemed to be enough to partially offset a very bearish build up in supplies. Part of the recovery in oil prices off yesterday's low may have been tied to some traders coming to the conclusion that China's steps to soak up excess liquidity, which had undermined demand optimism earlier in the week, is just a sign of economic strength and a reflection of the country's robust demand for raw commodities including oil. So far March crude oil has held to a fairly tight range overnight with the upside limited by overhead resistance at $80.75 and the market tentatively holding above retracement support at $79.86. However, we are skeptical of the market's upside potential given that oil supplies are quickly rebuilding this month after refiners drained end of the year supplies for tax reasons. It was particularly bearish to see a 3.7 million barrel rise in oil stocks despite a 1.4% jump in the refinery operating rate. But even a more negative development for crude oil is the build up in product stocks, which suggests fuel demand remains anemic, even at a pinnacle in heating demand. In fact, the EIA reported total product demand over the past four weeks was still down about 1% compared to year ago. Since speculators were likely holding a record net long position in crude at this week's highs, the $5.65 price break may not have been enough to correct the market's extreme overbought condition and that could still be a limiting factor for the bull camp. Therefore, in order to shake off the bearish supply side setup a much more optimistic macro economic view will need to take hold to brighten the outlook for oil demand. In order for March crude oil to make a push above yesterday's high at $81.01 will likely require more upside leadership from equities and better than expected readings in today's reports on weekly jobless claims and retail sales. Otherwise, we see the bearish supply situation having the potential to exert more downward pressure on March crude oil in the short-run that could eventually pull the market back toward key retracement near $77.03.
Natural Gas:
It was a bit surprising to see such a strong recovery bounce in natural gas yesterday, but apparently traders were positioning to possibly see a record fuel draw from storage in today's report. Most traders are expecting fuel stocks to decline by 256 bcf which would be significantly above last year's 88 bcf draw and the 5 year average decline of 76 bcf. But there has been talk that last week's frigid temperatures may result in a 280 bcf draw since there was apparently some well head freezing and power demand reached a winter record last week. A fuel storage drain of that size would exceed the previous record of 274 bcf decline seen in January 2008. But while the initial reaction to a big storage draw may be positive, we remain skeptical of the upside potential for March natural gas given the temperature warm up expected in key heating regions over the next two weeks. Given the pent up trade anticipation, the storage report will certainly set the early tone. A push through overhead resistance at $5.75 could give March natural gas some technical upside traction, but we still see the $6.00 level as a tough ceiling to crack unless optimism toward industrial fuel demand begins to take hold. In recent weeks storage reports have been a bit disappointing and given the above average temperature forecast that will certainly reduce heating demand, seeing a fuel draw under 256 bcf could trigger a sizable price break in March natural gas with the market perhaps giving back a large portion of yesterday's gains.
While the S&P didn't manage a new low in the range down recovery move yesterday, it did forge a quasi critical low on the charts and has remained near yesterday's highs into the early Thursday morning trade. While one might have expected the US financial sector to remain weak in the face of the recent announcement to tax financial companies for their TARP use, the market has apparently managed to shift its focus on more positive issues. Apparently the market was lifted by favorable earnings news from Rio Tinto, as that suggests the recent interest in natural resource companies is at least partially justified. However, we also get the sense that the markets are in need of even more favorable macro economic evidence to erase concerns that stock prices are over valued. Certainly the stock market was lifted by the mostly favorable US Federal Reserve Beige Book yesterday afternoon, but the trade also seems to need additional confirmation of progression from the consumer and that could come from the US retail sales report this morning. We suspect that the market will get something supportive from the claims reports, but the real focus might remain on the retail sales reading. With Intel reporting earnings after the close today, the earnings influence looks to be the main focal point into the end of the week. We have to give the bull camp a slight edge this morning, but we see the market as a spoiled child in need of constant support from the US scheduled data flow.
Dow:
Up trend channel resistance is seen today up at 10,669 but to see the Mini Dow run up into that level probably requires a decent sweep of scheduled data, particularly from the retail sales report. One shouldn't fight the up trend bias, but one should be watching the headlines closely for any news that dents macro economic sentiment. In fact, given the discussion of the Greece situation by the EU officials yesterday and seeing a formal ECB meeting today, there could be some credit related concerns coming out of that meeting. Therefore, the bias is up but the failure to hold above 10,600 wouldn't be a favorable technical signal in a market that doesn't appear to have a solid definitive bullish focus.
The market made a new contract high on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside objective is 10727. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 10704 and 10727, while 1st support hits today at 10610 and below there at 10538.
S&P:
As suggested already, the S&P managed a quasi critical reversal off the break early in the week, but since that spike down move wasn't a new low for the move, that washout probably didn't totally exhaust the bear camp. Nonetheless the market did correct some of its technically overbought condition and therefore it might not take much in the way of favorable news to see the March S&P make an attempt at the 1150 level. As in other markets, to charge into and sustain new highs probably requires a lift from Intel later today. We would remain bullish toward the S&P, as long as the March S&P manages to hold above 1140.80.
Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next downside target is now at 1123.38. The next area of resistance is around 1149.50 and 1155.37, while 1st support hits today at 1133.50 and below there at 1123.38.
NASDAQ:
The Nasdaq seems to have recovered from the Google/China inspired setback. In retrospect, there were other macro economic negatives that added into the correction in the Nasdaq early this week but with Intel earnings due out after the close today, we suspect that investors saw this week's break as a chance to add to their long holdings. Without some fresh major negative headline development, the March Nasdaq might be in a solid technical position to rally to new highs, but that will clearly require a 'beat' on the streets Intel earnings after the bell today. We would remain bullish toward the Nasdaq as long as it manages to hold above 1880 on the charts.
US Dollar:
So far, the Dollar has managed to hold above the prior session's lows. However, despite seeing a somewhat up beat US Federal Reserve Beige Book yesterday, the Dollar just doesn't seem to be in a position to throw off the downward bias, without something very strong from the US data flow. In fact, with a very strong Australian jobs report overnight, the US condition would seem to look a little softer and that probably means that the trade will be a harsh judge of the US scheduled data flow this morning. In other words, seeing a +.3 to +.5 gain in retail sales this morning might not lend any support to the Dollar, while anything weaker than that range, could foster fresh selling of the Dollar. Not surprisingly, the Dollar doesn't even see the new tax on TARP users as a development that shores up the US financial situation and that highlights a trade that is generally spinning developments into a bearish track for the Dollar. In conclusion, assume that the path of least resistance is pointing downward in the Dollar unless there is a headline growth reading that sends US equities into new high ground.
Gold:
Some gold bulls will suggest that the Dollar's recent track below the 77.00 level is fostering ideas that the Dollar remains in a down trend pattern that started back on December 22nd. While the gold market might be supported by news of another year over year 4.9% decline in November South African gold production, that news is partially countervailed by news of an increase in gold production from Fresnillo. While the South African production decline would seem to overshadow a rise in production from a single gold producer, the gold market was also presented with higher output news from Rio Tinto overnight. However, the gold market just hasn't been overly focused on classic supply side developments, as the demand or investment track has typically controlled market sentiment. While some traders are fearful of some type of move from the ECB meeting, it is probably still premature to fret over rising Euro zone rates. In the end, it would probably be a surprise to see the ECB actually move on rates, but it wouldn't be as big of a surprise to see the ECB dialogue toward future rate moves change a little. The 50 day moving average in the April gold today comes in down at $1,132.40.
We continue to have trouble coming up with a scenario where the bulls manage to regain full control of the market in the near term. We can't rule out some moderate strength in gold today on residual Dollar weakness but with the trade starting to fear rate hike action from a number of central banks and the Chinese and Australian central banks seemingly already into a rate hike cycle, we have a sinking feeling toward the gold trend. As suggested earlier this week, inflation almost has to sneak up on the market, or there has to be another serious financial threat to the US, to put the gold bulls back into the driver's seat. We might suggest that longs exit gold futures and use gold calls instead.
Silver:
While the March silver contract has generally managed to respect the even number $18.50 level overnight, there is almost a pattern of lower highs forming on the charts this week. Like the gold market, the silver market was also presented with some classic physical supply side news overnight. However, in the silver market the 4th quarter silver output rise from Fresnillo is a somewhat noted supply figure for the silver trade. However, as in the gold market, the silver trade recently hasn't put a large premium on physical supply side news. With the US Dollar chopping around both sides of unchanged this morning, it is possible that the US scheduled data flow will be an important influence on silver prices this morning. With copper and energy prices showing only marginal early strength today and a host of other physical commodity markets showing initial weakness, one could suggest that silver needs to see favorable US numbers, without a higher US dollar to spark a silver rally today.
As in the gold market, we are having trouble figuring out a way for silver to weave through the current market setup and come away with a definitively bullish track. However, we would hold out some bullish hope that the market will see some strong numbers today or that the Intel earnings after the close will present a more positive macro economic view and that in turn might allow silver to rally. However, the numbers have to be strong enough to fan economic optimism, but not so strong that the Dollar rallies. We are bullish but we have seen much better conditions for the silver bulls than are currently in place.
Crude Oil:
Crude oil prices have been able to bounce a bit in the early overnight action and a portion of the gains are likely based on technical signals with price support also stemming from an improving macro economic view tied to gains in global equities following the rally in the US stock market yesterday. March crude oil showed some technical strength by significantly cutting losses yesterday and holding a test of the 40 day moving average at $78.71. It looks as if some better corporate earnings news along with the Fed's Beige Book report showing economic improvement expanding to more districts helped to improve the macro economic climate to a certain extent and that seemed to be enough to partially offset a very bearish build up in supplies. Part of the recovery in oil prices off yesterday's low may have been tied to some traders coming to the conclusion that China's steps to soak up excess liquidity, which had undermined demand optimism earlier in the week, is just a sign of economic strength and a reflection of the country's robust demand for raw commodities including oil. So far March crude oil has held to a fairly tight range overnight with the upside limited by overhead resistance at $80.75 and the market tentatively holding above retracement support at $79.86. However, we are skeptical of the market's upside potential given that oil supplies are quickly rebuilding this month after refiners drained end of the year supplies for tax reasons. It was particularly bearish to see a 3.7 million barrel rise in oil stocks despite a 1.4% jump in the refinery operating rate. But even a more negative development for crude oil is the build up in product stocks, which suggests fuel demand remains anemic, even at a pinnacle in heating demand. In fact, the EIA reported total product demand over the past four weeks was still down about 1% compared to year ago. Since speculators were likely holding a record net long position in crude at this week's highs, the $5.65 price break may not have been enough to correct the market's extreme overbought condition and that could still be a limiting factor for the bull camp. Therefore, in order to shake off the bearish supply side setup a much more optimistic macro economic view will need to take hold to brighten the outlook for oil demand. In order for March crude oil to make a push above yesterday's high at $81.01 will likely require more upside leadership from equities and better than expected readings in today's reports on weekly jobless claims and retail sales. Otherwise, we see the bearish supply situation having the potential to exert more downward pressure on March crude oil in the short-run that could eventually pull the market back toward key retracement near $77.03.
Natural Gas:
It was a bit surprising to see such a strong recovery bounce in natural gas yesterday, but apparently traders were positioning to possibly see a record fuel draw from storage in today's report. Most traders are expecting fuel stocks to decline by 256 bcf which would be significantly above last year's 88 bcf draw and the 5 year average decline of 76 bcf. But there has been talk that last week's frigid temperatures may result in a 280 bcf draw since there was apparently some well head freezing and power demand reached a winter record last week. A fuel storage drain of that size would exceed the previous record of 274 bcf decline seen in January 2008. But while the initial reaction to a big storage draw may be positive, we remain skeptical of the upside potential for March natural gas given the temperature warm up expected in key heating regions over the next two weeks. Given the pent up trade anticipation, the storage report will certainly set the early tone. A push through overhead resistance at $5.75 could give March natural gas some technical upside traction, but we still see the $6.00 level as a tough ceiling to crack unless optimism toward industrial fuel demand begins to take hold. In recent weeks storage reports have been a bit disappointing and given the above average temperature forecast that will certainly reduce heating demand, seeing a fuel draw under 256 bcf could trigger a sizable price break in March natural gas with the market perhaps giving back a large portion of yesterday's gains.
Wednesday, January 13, 2010
YM Stopped Out
Ouch! We missed that 2nd target by 1 tick and then the sell off at the close stopped us out back at breakeven of 10623.
But it was a profitable trade none the less and thats all you can ask for. Tracker will be updated shortly.
But it was a profitable trade none the less and thats all you can ask for. Tracker will be updated shortly.
YM Target #1 Hit
We just hit our first target for a nice little gain.
Target #2 is @ 10657
Move your stop to breakeven @ 10623
Target #2 is @ 10657
Move your stop to breakeven @ 10623
YM Trade Entry
Symbol: YM
Chart: 5m
Entry: Buy Stop 10624
Stop: 10605
Target 1: 10638
Target 2: 10657
Target 3: 10688
Chart: 5m
Entry: Buy Stop 10624
Stop: 10605
Target 1: 10638
Target 2: 10657
Target 3: 10688
Watching YM & SI
We have long setups taking shape on the YM and SI, both on the 5m chart. Keep an eye on these.
SOH
Nothing doing this morning. Lots of chop. Nat gas just had a big move to the up side so we will see if we get a long entry later today but everything else is very choppy.
Trade Traker Update
Ok, its been a great start.
We have had 5 out of 6 winners with four 2nd targets hit and two 3rd targets hit.
Here are the numbers for our last trade on QM
Ex-1 = $854.00
Ex-2 = $1604.00
Here is the overall P&L
Ex-1 = $3309.00 (+33.09%)
Ex-2 = $3539.00 (+35.39%)
So Ex-2 has come back to take the lead after that great 3rd target hit on QM. Either way we have had a fantastic start.
We have had 5 out of 6 winners with four 2nd targets hit and two 3rd targets hit.
Here are the numbers for our last trade on QM
Ex-1 = $854.00
Ex-2 = $1604.00
Here is the overall P&L
Ex-1 = $3309.00 (+33.09%)
Ex-2 = $3539.00 (+35.39%)
So Ex-2 has come back to take the lead after that great 3rd target hit on QM. Either way we have had a fantastic start.
QM Target #3 Hit
Well that was nice. Out of the final contract @ 79.500 before the report. Overall a most excellent trade. Trade tracker will be updated shortly.
And our HE swing trade is started to make a move to the upside as well.
And our HE swing trade is started to make a move to the upside as well.
QM Update
Well we came within 4 ticks of hitting our 3rd traget in the overnight session. The higher time frames still look bearish despite the consolidation and drift higher. We have crude inventories coming out in about an hour. So if you see a place to take profits before then I would encourage that. I am already out of the trade beacause I am trading Ex-1 which ends on the second target. I will continue to track this though for Ex-2 through the report.
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
With international equity markets overnight remaining off balance because of; the disappointing kick off to the US earnings cycle, uncertainty off the Google/China issue and also because of the lingering fear of Chinese tightening, there continues to be a mostly bearish view in place. We have also noted some coverage of ongoing foreclosure problems and talk of commercial real estate problems, but so far those issues haven't given off signs that they are set to become 'the' focus of the trade. Nonetheless, the market has also seen a series of US tightening stories (one from a US Fed member) but that talk was also accompanied by Fed predictions that unemployment would remain high for a long time. In other words, the stock market is seeing a relatively negative flow of news from the US Fed when they promise or threaten higher rates but also suggest that the employment picture is still bad. In other words, the Fed paints a negative picture regardless of their views on the recovery. However, with some countervailing economic readings coming out of Euro zone overnight and suspect economic readings from the UK there just wasn't any definitive help for the bull camp in the overnight economic readings. With the US economic report slate mostly empty today and the Google censorship issue a possible negative, we have to leave a slight edge with the bear camp today. However, today would technically be the third day down in some measures and that increases the odds of a bottoming effort after some initial downside action.
Dow:
Overhead resistance in the March Mini Dow is seen today at 10,635 but we doubt that area will be tested in the early trade. In fact, given the slack macro economic views and the fear of something negative from the Google situation, we would not be surprised to see a slide to close-in support down at 10,566, with the next more significant technical support level seen down at 10,537. However, up trend channel support is ultimately seen down at 10,519 basis the March contract.
Momentum studies are trending higher but have entered overbought levels. The close above the 9-day moving average is a positive short-term indicator for trend. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 10664. The next area of resistance is around 10637 and 10664, while 1st support hits today at 10549 and below there at 10487.
S&P:
Up trend channel support in the March S&P is seen all the way down at 1120.70 but with the March S&P unable to close back above the mid point of the big range down washout yesterday, we don't get a solid bottoming signal from yesterday's lows. Since today is technically only the second day down on a typical correction count, it is certainly possible to see more downside work ahead. At least in the early action today, we would see ultra critical support at 1131, but the flow of news is still favoring the bear camp.
The daily stochastics have crossed over down which is a bearish indication. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The market's close above the 9-day moving average suggests the short-term trend remains positive. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside objective is 1119.44. The next area of resistance is around 1141.62 and 1149.93, while 1st support hits today at 1126.38 and below there at 1119.44.
NASDAQ:
Unfortunately for the bulls in the Nasdaq, up trend channel support isn't seen until the 1831 level today. Without the Google/China flap and the noted weakness in Google shares this morning, we would have discounted the potential for full a slide down to the up trend channel support line. However, the overall broad view on the recovery is still in doubt and the bull camp doesn't look to get much help from the headlines again today. At least initially the 1850 level looks to be solid support, with that level possibly representing the spike down reversal signal for the marketplace.
US Dollar:
The Dollar comes into the action today sitting just above a fresh downside breakout point on the charts. With the Chinese rate hike mentality overshadowing ideas that the US might hike rates before the Euro zone, and the outlook for the US economy currently suspect, the path of least resistance is still pointing downward in the Dollar. If the Dollar were poised to recover, we would have expected the Dollar to have bounced aggressively yesterday in the face of the favorable US auction results and also because of the news that the US Fed made a record $51 billion in 2009. However, the Dollar just isn't responding to bullish news and it would also seem like the partially negative kick off to the US earnings cycle is adding into the bearish tilt in the Dollar. While the US Dollar might garner some support from the US Fed Beige Book result later on today, we are doubtful that news will actually stem the near term weakness in the Dollar. In order to turn the Dollar back up might require an international flight to quality incident, or a very strong US economic report and that doesn't look to be in the cards today.
Gold:
Clearly a host of physical commodities like gold were undermined by the Chinese tightening news and that issue looks to hang over the trade again today because of a lack of fresh scheduled US economic news. However, it does seem as if a weaker Dollar has at least temporarily stemmed the brisk liquidation pattern that was seen from the prior trading session. The 50 day moving average in the April gold contract is seen at $1,130.70 today but since the Chinese tightening story seems to have been played out twice, it is possible that the negative influences off that story has run its course and the market might be able to give more credence to classic technical indicators. With the gold and physical markets still somewhat off balance because of the disappointing US earnings report from Alcoa, the gold bulls might need constant support from a weaker US Dollar just to see gold hold above the prior low of $1,125.60. With the overnight low of $1,126.60, relatively close to the prior session's low, that has prompted the tech crowd to peg the $1,126 to $1,125 level as some form of quasi double low pivot point on the charts. It is also possible that a noted improvement in Indian gold imports for December of 2009, over the December 2008 import figures lent some support to gold prices overnight. However, the gold trade recently just doesn't seem to be overly interested in classic physical supply side developments.
Silver:
While the initial US equity market track is positive this morning, international equity markets overnight were initially under significant pressure and that might serve to dampen interest toward a host of physical commodity markets. However, as in the gold market, the silver market is benefiting from a fresh new low for the move in the US Dollar. While the silver bulls might hope to get some residual support from ongoing news of a tightening of supply of American Eagle silver coins at the US Mint, the silver market just hasn't been able to benefit from classic physical supply side stories. Similarly the trade probably doesn't garner than much additional support from news of another modest decline in daily silver exchange stocks. With copper prices showing some recovery action today, the silver trade might not see as much drag from that outside market force, as copper at times on Tuesday, seemed to be dragging heavily on silver prices. In the end, a slightly up beat initial track in US equities and a weaker US Dollar tone appears to have given rise to a bounce up and away from the prior session's lows.
Crude Oil:
Crude oil has followed through lower overnight after yesterday's sharp break as a bearish turn in events has damaged demand sentiment and the short-term supply outlook. There is no question that March crude oil reached a technically overbought extreme on the $12 rally from the December low and the news this week has certainly provided traders with strong incentives to take profits. March crude oil has seen a sharp retreat from 15 month highs this week and yesterday's bearish API report is adding to the selling bias which is now firmly in place. While API reported a 1.2 million barrel rise in crude oil stocks which was in line with expectations, oil markets have been unnerved by the sharp jump in product stocks including distillates which rose despite mostly frigid weather conditions last week. With the API report showing a 1 million barrel jump in oil imports, last month's oil supply drain was likely just tax related window dressing. Since refinery operations remain below 80% and refiners are starting to announce maintenance plans, there seems to be a higher risk for oil stocks to climb in the weeks ahead. Part of the rally in crude oil has been based on optimism that the strong growth in China's oil demand with oil imports hitting a record level last year, would spill over into the European and US markets. But oil market sentiment has been undermined by China's steps to reign in liquidity amid concerns that tighter monetary policy will weaken demand for commodities including oil. Seeing the EIA reduce their world and US oil demand outlooks for this year has likely added to bearish sentiment. The oil market is also under pressure as a poor start to the US corporate earnings season has shaken macro economic confidence and seems to be raising doubts about the pace of the economic recovery. Fuel demand destruction has been further stoked by a warming shift in the weather pattern for the second half of the month that could notably reduce winter heating demand and dampen the prospect for a reduction in fuel supplies. Technically, March crude oil still looks to be under the negative influence of Monday's price reversal, but so far the market has been able to hold above the key $80 support level. Reports that Russia may cut off supplies to Belarus due to a pricing dispute may provide some price support to crude oil since this action could potentially impact oil supplies to Europe. But with funds likely holding a record net long position in oil on the rally to this week's highs, we suspect the market still has ample selling capacity if today's EIA report confirms the stock builds reported by API. With a selling bias firmly in place, seeing a bearish EIA report is likely to pressure March crude oil below retracement support at $79.86 which would then put the next downside target in the $78.67 to $78.45 price range. With the oil market still showing signs of being technically overbought, we suspect it will be difficult for the market to reverse course to the upside just yet unless a big bullish surprise is seen in today's EIA report, a more positive macro economic view can take hold or geopolitical tensions escalate. Otherwise, the path of least resistance still looks to remain down.
Considering the extent oil markets became overbought on the rally from the December low, we suspect they are still vulnerable to some additional selling pressure if today's EIA report also reveals a bearish surprise. In order to fully shake free from the bear camp's grip we suspect macro economic optimism for a recovery in oil demand will need to surface again and that may require a strong rally in equities.
Natural Gas:
While technical short covering seemed to be behind the higher trade in natural gas yesterday, we see limited upside potential as long as the warmer temperature forecast holds and that will leave downside price risk in place. The trade may be a bit hesitant to aggressively sell natural gas ahead of this week's storage report since some are expecting to see a record draw down in fuel stocks near 280 bcf due to the frigid conditions that blanketed most of the US last week. But we suspect any price support from the storage news will be short lived since most weather forecasters are predicting temperatures to warm up into the 40's for key US heating regions over the second half of the month. The flip to above normal temperatures will reduce heating loads and that may even result in storage draws that are below the 5 year average in coming weeks. In their short-term forecast released yesterday the EIA continued to predict natural gas production to decline by 3% this year, but with fuel demand expected to be unchanged, it may still take some time before the market's fundamentals become more balanced. So far, there haven't been any clear signs that industrial fuel demand is starting to recover which will need to be seen in order to support natural gas at higher price levels. March natural gas still looks to be under the negative technical influence of the price reversal from last week. If the warm temperature outlook holds, we can't rule out an eventual retreat in March natural gas back towards $5.114, which is a.618 retracement of the December low to January high range.
With international equity markets overnight remaining off balance because of; the disappointing kick off to the US earnings cycle, uncertainty off the Google/China issue and also because of the lingering fear of Chinese tightening, there continues to be a mostly bearish view in place. We have also noted some coverage of ongoing foreclosure problems and talk of commercial real estate problems, but so far those issues haven't given off signs that they are set to become 'the' focus of the trade. Nonetheless, the market has also seen a series of US tightening stories (one from a US Fed member) but that talk was also accompanied by Fed predictions that unemployment would remain high for a long time. In other words, the stock market is seeing a relatively negative flow of news from the US Fed when they promise or threaten higher rates but also suggest that the employment picture is still bad. In other words, the Fed paints a negative picture regardless of their views on the recovery. However, with some countervailing economic readings coming out of Euro zone overnight and suspect economic readings from the UK there just wasn't any definitive help for the bull camp in the overnight economic readings. With the US economic report slate mostly empty today and the Google censorship issue a possible negative, we have to leave a slight edge with the bear camp today. However, today would technically be the third day down in some measures and that increases the odds of a bottoming effort after some initial downside action.
Dow:
Overhead resistance in the March Mini Dow is seen today at 10,635 but we doubt that area will be tested in the early trade. In fact, given the slack macro economic views and the fear of something negative from the Google situation, we would not be surprised to see a slide to close-in support down at 10,566, with the next more significant technical support level seen down at 10,537. However, up trend channel support is ultimately seen down at 10,519 basis the March contract.
Momentum studies are trending higher but have entered overbought levels. The close above the 9-day moving average is a positive short-term indicator for trend. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 10664. The next area of resistance is around 10637 and 10664, while 1st support hits today at 10549 and below there at 10487.
S&P:
Up trend channel support in the March S&P is seen all the way down at 1120.70 but with the March S&P unable to close back above the mid point of the big range down washout yesterday, we don't get a solid bottoming signal from yesterday's lows. Since today is technically only the second day down on a typical correction count, it is certainly possible to see more downside work ahead. At least in the early action today, we would see ultra critical support at 1131, but the flow of news is still favoring the bear camp.
The daily stochastics have crossed over down which is a bearish indication. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The market's close above the 9-day moving average suggests the short-term trend remains positive. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside objective is 1119.44. The next area of resistance is around 1141.62 and 1149.93, while 1st support hits today at 1126.38 and below there at 1119.44.
NASDAQ:
Unfortunately for the bulls in the Nasdaq, up trend channel support isn't seen until the 1831 level today. Without the Google/China flap and the noted weakness in Google shares this morning, we would have discounted the potential for full a slide down to the up trend channel support line. However, the overall broad view on the recovery is still in doubt and the bull camp doesn't look to get much help from the headlines again today. At least initially the 1850 level looks to be solid support, with that level possibly representing the spike down reversal signal for the marketplace.
US Dollar:
The Dollar comes into the action today sitting just above a fresh downside breakout point on the charts. With the Chinese rate hike mentality overshadowing ideas that the US might hike rates before the Euro zone, and the outlook for the US economy currently suspect, the path of least resistance is still pointing downward in the Dollar. If the Dollar were poised to recover, we would have expected the Dollar to have bounced aggressively yesterday in the face of the favorable US auction results and also because of the news that the US Fed made a record $51 billion in 2009. However, the Dollar just isn't responding to bullish news and it would also seem like the partially negative kick off to the US earnings cycle is adding into the bearish tilt in the Dollar. While the US Dollar might garner some support from the US Fed Beige Book result later on today, we are doubtful that news will actually stem the near term weakness in the Dollar. In order to turn the Dollar back up might require an international flight to quality incident, or a very strong US economic report and that doesn't look to be in the cards today.
Gold:
Clearly a host of physical commodities like gold were undermined by the Chinese tightening news and that issue looks to hang over the trade again today because of a lack of fresh scheduled US economic news. However, it does seem as if a weaker Dollar has at least temporarily stemmed the brisk liquidation pattern that was seen from the prior trading session. The 50 day moving average in the April gold contract is seen at $1,130.70 today but since the Chinese tightening story seems to have been played out twice, it is possible that the negative influences off that story has run its course and the market might be able to give more credence to classic technical indicators. With the gold and physical markets still somewhat off balance because of the disappointing US earnings report from Alcoa, the gold bulls might need constant support from a weaker US Dollar just to see gold hold above the prior low of $1,125.60. With the overnight low of $1,126.60, relatively close to the prior session's low, that has prompted the tech crowd to peg the $1,126 to $1,125 level as some form of quasi double low pivot point on the charts. It is also possible that a noted improvement in Indian gold imports for December of 2009, over the December 2008 import figures lent some support to gold prices overnight. However, the gold trade recently just doesn't seem to be overly interested in classic physical supply side developments.
Silver:
While the initial US equity market track is positive this morning, international equity markets overnight were initially under significant pressure and that might serve to dampen interest toward a host of physical commodity markets. However, as in the gold market, the silver market is benefiting from a fresh new low for the move in the US Dollar. While the silver bulls might hope to get some residual support from ongoing news of a tightening of supply of American Eagle silver coins at the US Mint, the silver market just hasn't been able to benefit from classic physical supply side stories. Similarly the trade probably doesn't garner than much additional support from news of another modest decline in daily silver exchange stocks. With copper prices showing some recovery action today, the silver trade might not see as much drag from that outside market force, as copper at times on Tuesday, seemed to be dragging heavily on silver prices. In the end, a slightly up beat initial track in US equities and a weaker US Dollar tone appears to have given rise to a bounce up and away from the prior session's lows.
Crude Oil:
Crude oil has followed through lower overnight after yesterday's sharp break as a bearish turn in events has damaged demand sentiment and the short-term supply outlook. There is no question that March crude oil reached a technically overbought extreme on the $12 rally from the December low and the news this week has certainly provided traders with strong incentives to take profits. March crude oil has seen a sharp retreat from 15 month highs this week and yesterday's bearish API report is adding to the selling bias which is now firmly in place. While API reported a 1.2 million barrel rise in crude oil stocks which was in line with expectations, oil markets have been unnerved by the sharp jump in product stocks including distillates which rose despite mostly frigid weather conditions last week. With the API report showing a 1 million barrel jump in oil imports, last month's oil supply drain was likely just tax related window dressing. Since refinery operations remain below 80% and refiners are starting to announce maintenance plans, there seems to be a higher risk for oil stocks to climb in the weeks ahead. Part of the rally in crude oil has been based on optimism that the strong growth in China's oil demand with oil imports hitting a record level last year, would spill over into the European and US markets. But oil market sentiment has been undermined by China's steps to reign in liquidity amid concerns that tighter monetary policy will weaken demand for commodities including oil. Seeing the EIA reduce their world and US oil demand outlooks for this year has likely added to bearish sentiment. The oil market is also under pressure as a poor start to the US corporate earnings season has shaken macro economic confidence and seems to be raising doubts about the pace of the economic recovery. Fuel demand destruction has been further stoked by a warming shift in the weather pattern for the second half of the month that could notably reduce winter heating demand and dampen the prospect for a reduction in fuel supplies. Technically, March crude oil still looks to be under the negative influence of Monday's price reversal, but so far the market has been able to hold above the key $80 support level. Reports that Russia may cut off supplies to Belarus due to a pricing dispute may provide some price support to crude oil since this action could potentially impact oil supplies to Europe. But with funds likely holding a record net long position in oil on the rally to this week's highs, we suspect the market still has ample selling capacity if today's EIA report confirms the stock builds reported by API. With a selling bias firmly in place, seeing a bearish EIA report is likely to pressure March crude oil below retracement support at $79.86 which would then put the next downside target in the $78.67 to $78.45 price range. With the oil market still showing signs of being technically overbought, we suspect it will be difficult for the market to reverse course to the upside just yet unless a big bullish surprise is seen in today's EIA report, a more positive macro economic view can take hold or geopolitical tensions escalate. Otherwise, the path of least resistance still looks to remain down.
Considering the extent oil markets became overbought on the rally from the December low, we suspect they are still vulnerable to some additional selling pressure if today's EIA report also reveals a bearish surprise. In order to fully shake free from the bear camp's grip we suspect macro economic optimism for a recovery in oil demand will need to surface again and that may require a strong rally in equities.
Natural Gas:
While technical short covering seemed to be behind the higher trade in natural gas yesterday, we see limited upside potential as long as the warmer temperature forecast holds and that will leave downside price risk in place. The trade may be a bit hesitant to aggressively sell natural gas ahead of this week's storage report since some are expecting to see a record draw down in fuel stocks near 280 bcf due to the frigid conditions that blanketed most of the US last week. But we suspect any price support from the storage news will be short lived since most weather forecasters are predicting temperatures to warm up into the 40's for key US heating regions over the second half of the month. The flip to above normal temperatures will reduce heating loads and that may even result in storage draws that are below the 5 year average in coming weeks. In their short-term forecast released yesterday the EIA continued to predict natural gas production to decline by 3% this year, but with fuel demand expected to be unchanged, it may still take some time before the market's fundamentals become more balanced. So far, there haven't been any clear signs that industrial fuel demand is starting to recover which will need to be seen in order to support natural gas at higher price levels. March natural gas still looks to be under the negative technical influence of the price reversal from last week. If the warm temperature outlook holds, we can't rule out an eventual retreat in March natural gas back towards $5.114, which is a.618 retracement of the December low to January high range.
Tuesday, January 12, 2010
Afternoon volume
ES - 1.5m contracts
NYSE - 614m vs 569m (+8%)
NASDAQ - 1.52b vs 1.37b (+12%)
***Disturbution*** Market down on higher volume after light volume on the last 3 up days.
NYSE - 614m vs 569m (+8%)
NASDAQ - 1.52b vs 1.37b (+12%)
***Disturbution*** Market down on higher volume after light volume on the last 3 up days.
QM Target #1 Hit
Crude just had a very nice move down to follow the market lowere.
Our 1st target was hit at 81.000
Move stop on remaining contracts to breakeven at 81.400
2nd Target is 80.450
Our 1st target was hit at 81.000
Move stop on remaining contracts to breakeven at 81.400
2nd Target is 80.450
QM Trade Triggered
Our sell stop was just hit. We are short 3 @ 81.400.
1st Target is 81.025
Stop is 82.025
1st Target is 81.025
Stop is 82.025
QM Entry
Symbol: QM
Chart: 15m
Entry: Sell Stop @ 81.400
Stop: 82.025
Target 1: 81.025
Target 2: 80.450
Target 3: 79.500
Chart: 15m
Entry: Sell Stop @ 81.400
Stop: 82.025
Target 1: 81.025
Target 2: 80.450
Target 3: 79.500
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
The stock market is showing signs of correcting in the early action today. Apparently the kick off to the earnings cycle was disappointing yesterday afternoon, with Alcoa results failing to inject fresh optimism into the stock market. We would have expected S&P dialogue on the Chinese situation overnight to have supported the market overnight, as many analysts have recently fretted that the Chinese economy was in a bubble posture that was prepared to exert drag on the world recovery effort. The S&P rightly pointed out that China holds a 'large' external asset position and that the Chinese economy had enough positive momentum to offset their contingent liabilities. Those analyst that suggest the Chinese economy is a house of cards might have trouble explaining away the massive December import increases Sunday night that were seen in a host of heavy industrial commodities, especially in Iron ore as that suggests to us, that China is actually seeing some activity in its capacity to export steel to the world. While we are generally up beat toward growth prospects and think that the market should be cheered by the prospect of rates remaining low, we concede to the prospect that prices are somewhat overvalued and perhaps in need of a typical 2-3 day corrective setback. In most measures, today would only be the 2nd day down!
Dow:
The big cap stocks might be a burden to the market in the coming trading sessions, as earnings results will have to show some top line sales growth, or we suspect that a bit of a correction will be seen. In fact, the March Mini Dow might be destined to dip in a controlled fashion, back down to the even number 10,500 level, with an ultimate low potentially seen down at a quasi double low zone down around the 10,451 level. If the Mini Dow does break down in the coming sessions and the earnings cycle actually shows an improvement toward the end of the week, that could result in a noted recovery rally off even the slightest up beat earnings news story.
The market made a new contract high on the rally. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. The near-term upside target is at 10682. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 10656 and 10682, while 1st support hits today at 10570 and below there at 10511.
S&P:
With a new high for the move and failure in the prior trading session and a range down follow through this morning it is clear that the bear camp has gained the upper hand. As suggested already, we think the market is in the midst of a typical 2 to 3 day corrective setback that initially seems to be devoid of anxiety. While the Fed's Bullard brought up the prospect of commercial real estate problems, the trade so far hasn't latched onto that situation as a primary driving force of the bear case. However, we suspect that the March S&P is poised to slide back to 1127.20, with up trend channel support today also seen down at 1119 today and at 1121 on Wednesday.
The market rallied to a new contract high. Rising stochastics at overbought levels warrant some caution for bulls. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next upside target is 1153.06. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 1147.87 and 1153.06, while 1st support hits today at 1137.63 and below there at 1132.57.
NASDAQ:
We don't really think that the lower cap or tech sector stocks have that much to worry about over the coming two trading sessions, but we also don't think that the Nasdaq will be able to completely avoid a track lower with the rest of the market. Near term downside targeting in the March Nasdaq is seen down at 1865.20, but an even lower track down to 1858.75 is possible if the current break extends to a three day corrective pattern.
Gold:
Clearly the Chinese move to tighten reserve requirements took some of the bullish edge off the rally in the prior trading session, but one might have expected the gold market to regain some footing off the S&P views overnight on China and South Korea credit ratings. However, the gold market is seeing a little more outside physical commodity market weakness in the early Tuesday trade, than was seen in the Monday morning trade and that at least temporarily resulted in the April gold contract falling back below the quasi even number $1,150 level in the early trading action. It is possible that a change in gold lending rules in Vietnam is being seen as a slight negative to gold prices, but Vietnam hasn't been a dominating key market indicator for the gold bulls recently and therefore that potentially bearish news item might not have much lasting influence. With the US Dollar potentially settling into a more positive correlation with the US equity markets and the macro economic view toward the US becoming a little more suspect in the wake of the US non farm payroll result late last week, it is possible that weak equity prices are contributing to the initial weakness in gold prices today. Therefore some gold bulls are hopeful that a favorable US Note auction result at mid session today will serve to underpin gold prices.
We have a bearish gut feeling toward gold today but we don't see the market as overly vulnerable to a large aggressive washout. However, we do see the prospect for additional Dollar weakness, but that potential benefit might be offset by ongoing weakness in the US equity markets. For a measure of bullish resolve today, look to the gold markets reaction to the Trade Balance figures, if gold can't rally in the face of a bigger trade deficit, then the bull camp is seemingly off the flight to quality track! On the other hand, if the US Trade Balance narrows, that suggests to us that the US economy is slower than expected and that probably isn't a good development for the gold bulls. Longs in the near term have to be defensive.
Silver:
With a minimally higher US Dollar, noted weakness in copper and weakness in energy prices, the silver trade would seem to be presented with a slightly negative fundamental track in the early Tuesday trade. With the US equity markets also showing some noted weakness and part of that weakness coming from a disappointing earnings report from Alcoa, the industrial track for silver prices would seem to be less than encouraging for the bull camp. However, the bull camp in silver might point out that silver was relatively less overbought technically than the gold and platinum markets, and that in turn could serve to cushion silver prices against liquidation pressure. While silver exchange stocks declined overnight, the silver market just hasn't been in a position to react to minor changes in physical silver supply. The bear camp might try to play up the slide below the even number $18.50 level early today as a negative, while the bull camp will suggest that the Silver market is still comfortably above the 50 day moving average. In the end, noted weakness in the equity markets, appears to have cast a negative shadow for some physical commodity markets this morning and therefore it is possible that the silver trade will take a large measure of direction from the stock market today.
With an early negative trade on the charts today, the bear camp would seem to have the edge out of the gate. However, we don't get the sense that the silver market is poised to see an aggressive washout unless the equities are severely up ended by concerns toward the US commercial real estate sector or some other major anxiety type event. Near term downside targeting in the March Silver is seen at $18.09, which is the first retracement level off the late December/early January rally.
Crude Oil:
Crude oil has come under additional pressure in the early overnight action weighed down by the market's overbought technical condition, a warmer weather forecast and expectations for a sizable jump in oil stocks leaving downside price risk in place. While the uptrend in March crude oil from the December low looks to have become entrenched, the market may now be sufficiently overbought and along with other considerations gives the oil market some short-term downside price potential. The price reversal in March crude oil yesterday after reaching a fresh 15 month high hints that a temporary top may have been set. Given the traders setup in latest COT report with options suggests that the combined fund and spec net long position in crude oil likely reached a record on yesterday's rally and that might leave the market with less buying capacity and technically vulnerable to a more significant correction before making another test of this week's highs. A warming temperature trend in the second half of the month will certainly reduce heating fuel demand and that may provide some traders with enough incentive to book profits considering part of the run up in crude oil seemed to be weather related. The EIA's monthly supply/demand outlook for oil is scheduled to be released today and there are reports that the agency will forecast a slower rate of rising oil demand for this year and next and that outlook may also be a bit disappointing. We also suspect crude oil will be susceptible to profit taking ahead of this week's inventory report since most traders are expecting oil stocks to rise about 1 million barrels. In the early going crude oil is feeling some pressure from the weak action in the equity market which could become more of a bearish influence if equities see a sharp break on earnings jitters following a disappointing report from Alcoa. News that China has taken some additional steps to tighten liquidity and interest rates along with OPEC members saying production will be left unchanged at the next meeting could be other factors that weigh on oil in the short run. Given the market's technical condition a pull back in March crude oil to test support at $81.50 looks possible. But we also can't rule out a move back to $80, which is the first critical retracement of the December/January rally. So far the oil market isn't finding too much price support from escalating militant violence in Nigeria.
A technical correction across all markets has been over due following the steep price gains since the December low. With funds likely holding record net long positions in crude oil, heating oil and gasoline, more aggressive profit taking could be inspired this session by the bearish weather forecast, weak equity trade and concerns over rising oil & gasoline stocks in this week's inventory report.
Natural Gas:
A change in the forecast to a warmer temperature outlook has the potential to put further pressure on natural gas over the near-term. February natural gas briefly rallied above the pivotal $6.00 price level last week on expectations that frigid temperatures would boost heating demand and help to drain excess supplies from storage. Some traders expect this week's storage report to show a record decline in fuel stocks of 280 bcf compare to the old record of 274 bcf draw seen in January 2008. But with most forecasters predicting a significant warm up for the second half of the month, we suspect even predictions for a record storage drop won't be enough to prevent additional selling interest in natural gas. Market sentiment is certainly being undermined by temperatures in the Midwest rising into the 40's later this week and into the 50's in parts of the Northeast by the weekend and the slump in heating demand has clearly given the edge back to the bear camp. Since weather related demand for natural gas is seasonal, the market needs a return of industrial fuel demand to support a sustained uptrend in price and so far there is little indication that industrial fuel demand is set to recover. With the latest COT report with options for natural gas showing a bearish setup with funds net short and small traders net long leaves the market vulnerable to more aggressive chart based selling if support levels fail to hold. With daily technical indicators also turning bearish, we can't rule out an eventual slide in February natural gas back to the $5.13 to $5.00 price level if the mild temperature forecast holds.
The stock market is showing signs of correcting in the early action today. Apparently the kick off to the earnings cycle was disappointing yesterday afternoon, with Alcoa results failing to inject fresh optimism into the stock market. We would have expected S&P dialogue on the Chinese situation overnight to have supported the market overnight, as many analysts have recently fretted that the Chinese economy was in a bubble posture that was prepared to exert drag on the world recovery effort. The S&P rightly pointed out that China holds a 'large' external asset position and that the Chinese economy had enough positive momentum to offset their contingent liabilities. Those analyst that suggest the Chinese economy is a house of cards might have trouble explaining away the massive December import increases Sunday night that were seen in a host of heavy industrial commodities, especially in Iron ore as that suggests to us, that China is actually seeing some activity in its capacity to export steel to the world. While we are generally up beat toward growth prospects and think that the market should be cheered by the prospect of rates remaining low, we concede to the prospect that prices are somewhat overvalued and perhaps in need of a typical 2-3 day corrective setback. In most measures, today would only be the 2nd day down!
Dow:
The big cap stocks might be a burden to the market in the coming trading sessions, as earnings results will have to show some top line sales growth, or we suspect that a bit of a correction will be seen. In fact, the March Mini Dow might be destined to dip in a controlled fashion, back down to the even number 10,500 level, with an ultimate low potentially seen down at a quasi double low zone down around the 10,451 level. If the Mini Dow does break down in the coming sessions and the earnings cycle actually shows an improvement toward the end of the week, that could result in a noted recovery rally off even the slightest up beat earnings news story.
The market made a new contract high on the rally. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. The near-term upside target is at 10682. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 10656 and 10682, while 1st support hits today at 10570 and below there at 10511.
S&P:
With a new high for the move and failure in the prior trading session and a range down follow through this morning it is clear that the bear camp has gained the upper hand. As suggested already, we think the market is in the midst of a typical 2 to 3 day corrective setback that initially seems to be devoid of anxiety. While the Fed's Bullard brought up the prospect of commercial real estate problems, the trade so far hasn't latched onto that situation as a primary driving force of the bear case. However, we suspect that the March S&P is poised to slide back to 1127.20, with up trend channel support today also seen down at 1119 today and at 1121 on Wednesday.
The market rallied to a new contract high. Rising stochastics at overbought levels warrant some caution for bulls. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next upside target is 1153.06. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 1147.87 and 1153.06, while 1st support hits today at 1137.63 and below there at 1132.57.
NASDAQ:
We don't really think that the lower cap or tech sector stocks have that much to worry about over the coming two trading sessions, but we also don't think that the Nasdaq will be able to completely avoid a track lower with the rest of the market. Near term downside targeting in the March Nasdaq is seen down at 1865.20, but an even lower track down to 1858.75 is possible if the current break extends to a three day corrective pattern.
Gold:
Clearly the Chinese move to tighten reserve requirements took some of the bullish edge off the rally in the prior trading session, but one might have expected the gold market to regain some footing off the S&P views overnight on China and South Korea credit ratings. However, the gold market is seeing a little more outside physical commodity market weakness in the early Tuesday trade, than was seen in the Monday morning trade and that at least temporarily resulted in the April gold contract falling back below the quasi even number $1,150 level in the early trading action. It is possible that a change in gold lending rules in Vietnam is being seen as a slight negative to gold prices, but Vietnam hasn't been a dominating key market indicator for the gold bulls recently and therefore that potentially bearish news item might not have much lasting influence. With the US Dollar potentially settling into a more positive correlation with the US equity markets and the macro economic view toward the US becoming a little more suspect in the wake of the US non farm payroll result late last week, it is possible that weak equity prices are contributing to the initial weakness in gold prices today. Therefore some gold bulls are hopeful that a favorable US Note auction result at mid session today will serve to underpin gold prices.
We have a bearish gut feeling toward gold today but we don't see the market as overly vulnerable to a large aggressive washout. However, we do see the prospect for additional Dollar weakness, but that potential benefit might be offset by ongoing weakness in the US equity markets. For a measure of bullish resolve today, look to the gold markets reaction to the Trade Balance figures, if gold can't rally in the face of a bigger trade deficit, then the bull camp is seemingly off the flight to quality track! On the other hand, if the US Trade Balance narrows, that suggests to us that the US economy is slower than expected and that probably isn't a good development for the gold bulls. Longs in the near term have to be defensive.
Silver:
With a minimally higher US Dollar, noted weakness in copper and weakness in energy prices, the silver trade would seem to be presented with a slightly negative fundamental track in the early Tuesday trade. With the US equity markets also showing some noted weakness and part of that weakness coming from a disappointing earnings report from Alcoa, the industrial track for silver prices would seem to be less than encouraging for the bull camp. However, the bull camp in silver might point out that silver was relatively less overbought technically than the gold and platinum markets, and that in turn could serve to cushion silver prices against liquidation pressure. While silver exchange stocks declined overnight, the silver market just hasn't been in a position to react to minor changes in physical silver supply. The bear camp might try to play up the slide below the even number $18.50 level early today as a negative, while the bull camp will suggest that the Silver market is still comfortably above the 50 day moving average. In the end, noted weakness in the equity markets, appears to have cast a negative shadow for some physical commodity markets this morning and therefore it is possible that the silver trade will take a large measure of direction from the stock market today.
With an early negative trade on the charts today, the bear camp would seem to have the edge out of the gate. However, we don't get the sense that the silver market is poised to see an aggressive washout unless the equities are severely up ended by concerns toward the US commercial real estate sector or some other major anxiety type event. Near term downside targeting in the March Silver is seen at $18.09, which is the first retracement level off the late December/early January rally.
Crude Oil:
Crude oil has come under additional pressure in the early overnight action weighed down by the market's overbought technical condition, a warmer weather forecast and expectations for a sizable jump in oil stocks leaving downside price risk in place. While the uptrend in March crude oil from the December low looks to have become entrenched, the market may now be sufficiently overbought and along with other considerations gives the oil market some short-term downside price potential. The price reversal in March crude oil yesterday after reaching a fresh 15 month high hints that a temporary top may have been set. Given the traders setup in latest COT report with options suggests that the combined fund and spec net long position in crude oil likely reached a record on yesterday's rally and that might leave the market with less buying capacity and technically vulnerable to a more significant correction before making another test of this week's highs. A warming temperature trend in the second half of the month will certainly reduce heating fuel demand and that may provide some traders with enough incentive to book profits considering part of the run up in crude oil seemed to be weather related. The EIA's monthly supply/demand outlook for oil is scheduled to be released today and there are reports that the agency will forecast a slower rate of rising oil demand for this year and next and that outlook may also be a bit disappointing. We also suspect crude oil will be susceptible to profit taking ahead of this week's inventory report since most traders are expecting oil stocks to rise about 1 million barrels. In the early going crude oil is feeling some pressure from the weak action in the equity market which could become more of a bearish influence if equities see a sharp break on earnings jitters following a disappointing report from Alcoa. News that China has taken some additional steps to tighten liquidity and interest rates along with OPEC members saying production will be left unchanged at the next meeting could be other factors that weigh on oil in the short run. Given the market's technical condition a pull back in March crude oil to test support at $81.50 looks possible. But we also can't rule out a move back to $80, which is the first critical retracement of the December/January rally. So far the oil market isn't finding too much price support from escalating militant violence in Nigeria.
A technical correction across all markets has been over due following the steep price gains since the December low. With funds likely holding record net long positions in crude oil, heating oil and gasoline, more aggressive profit taking could be inspired this session by the bearish weather forecast, weak equity trade and concerns over rising oil & gasoline stocks in this week's inventory report.
Natural Gas:
A change in the forecast to a warmer temperature outlook has the potential to put further pressure on natural gas over the near-term. February natural gas briefly rallied above the pivotal $6.00 price level last week on expectations that frigid temperatures would boost heating demand and help to drain excess supplies from storage. Some traders expect this week's storage report to show a record decline in fuel stocks of 280 bcf compare to the old record of 274 bcf draw seen in January 2008. But with most forecasters predicting a significant warm up for the second half of the month, we suspect even predictions for a record storage drop won't be enough to prevent additional selling interest in natural gas. Market sentiment is certainly being undermined by temperatures in the Midwest rising into the 40's later this week and into the 50's in parts of the Northeast by the weekend and the slump in heating demand has clearly given the edge back to the bear camp. Since weather related demand for natural gas is seasonal, the market needs a return of industrial fuel demand to support a sustained uptrend in price and so far there is little indication that industrial fuel demand is set to recover. With the latest COT report with options for natural gas showing a bearish setup with funds net short and small traders net long leaves the market vulnerable to more aggressive chart based selling if support levels fail to hold. With daily technical indicators also turning bearish, we can't rule out an eventual slide in February natural gas back to the $5.13 to $5.00 price level if the mild temperature forecast holds.
Monday, January 11, 2010
Nice Day!
I think thats it for today. I'm still watching this YM short on a 15m but with the internals still drifting higher I don't want to go against the grain. We could get an afternoon sell off with metals leading the way but I'm happy to SOH and get at it again tomorrow. So I hope everyone has a good night.
Afternoon volume
E-Mini = 1 million so far. (Light)
NYSE = 569m vs 582m (-2%)
NASDAQ = 1.37b vs 1.42b (-4%)
NYSE = 569m vs 582m (-2%)
NASDAQ = 1.37b vs 1.42b (-4%)
QM Stopped Out
Well it was a nice move down to only see it bounce all the way back up.
We are stopped out of the rest of the postion @ 82.650.
This situation is why I am tracking two different ways to trade the targets. During the testing process, hitting the 1st target and then getting stopped out at breakeven happened quite a bit so I'm using EX-1 to lock in more profits. We shall see which example preforms best in the long run.
Trade Traker has been updated:
Ex-1 = $379
Ex-2 = $179
P&L Totals
Ex-1 = $2,455.00
Ex-2 = $1,935.00
We are 4 out 5 with Ex-1 leading the way.
We are stopped out of the rest of the postion @ 82.650.
This situation is why I am tracking two different ways to trade the targets. During the testing process, hitting the 1st target and then getting stopped out at breakeven happened quite a bit so I'm using EX-1 to lock in more profits. We shall see which example preforms best in the long run.
Trade Traker has been updated:
Ex-1 = $379
Ex-2 = $179
P&L Totals
Ex-1 = $2,455.00
Ex-2 = $1,935.00
We are 4 out 5 with Ex-1 leading the way.
Watching Dow (YM)
We have a short setup coming into play on the mini Dow, but with internals flat and the Dow lagging the rest of the market we might pass on this one. Don't want to give back our morning profits if the market decides to rip back up.
QM Target #1 Hit
NICE!
Target #1 Hit @ 82.250
Move remaining contracts stop to breakeven.
Target #2 is @ 81.900
Target #1 Hit @ 82.250
Move remaining contracts stop to breakeven.
Target #2 is @ 81.900
Crude Trade Entry
Symbol: QM
Chart: 5m
Entry: Sell Stop 82.650
Stop: 83.025
Target 1: 82.250
Target 2: 81.900
Target 3: 81.250
Chart: 5m
Entry: Sell Stop 82.650
Stop: 83.025
Target 1: 82.250
Target 2: 81.900
Target 3: 81.250
Watching Crude
Still tracking short on gold but it is very choppy. Crude has been in a downtrend all morning and is looking like a short play setup on the 5m. Keep an eye on both of these.
QG Target #3 Hit
An excellent first trade to start the week and our first 3rd target winner.
We are out of our final contract @ 5.390.
Ex-1 = $391.50
Ex-2 = $704.00
The trade tracker has been updated.
Current P&L Totals:
Ex-1 = $2067.00
Ex-2 = $1756.00
Lets keep it going!
We are out of our final contract @ 5.390.
Ex-1 = $391.50
Ex-2 = $704.00
The trade tracker has been updated.
Current P&L Totals:
Ex-1 = $2067.00
Ex-2 = $1756.00
Lets keep it going!
Watching Gold
We might have a short setup taking shape in gold. The financials broke lower again before we got and entry. Same as last week. A setup starts to form only to have it runaway before we get the entry.
QG Target #2 Hit
Our 2nd target was just hit @ 5.470.
3rd target is 5.390 if you are trading EX-2.
Very nice start to the week. I'm updating the tracking sheets now.
3rd target is 5.390 if you are trading EX-2.
Very nice start to the week. I'm updating the tracking sheets now.
QG Target #1 Hit
Nice move down in Nat Gas.
First target hit @ 5.515.
Move stop to breakeven on remaining contracts.
Next target is 5.470
First target hit @ 5.515.
Move stop to breakeven on remaining contracts.
Next target is 5.470
QG Entry
Symbol: QG
Chart: 5m
Entry: 5.555
Stop: 5.605
Target 1: 5.515
Target 2: 5.470
Target 3: 5.390
Chart: 5m
Entry: 5.555
Stop: 5.605
Target 1: 5.515
Target 2: 5.470
Target 3: 5.390
Watching Nat Gas
We might have a short play on QG this morning. Waiting to see if the financials bounce and if the metals make a move down.
Swing Furutes Entry
We are putting the long feb hog trade back to work today.
Buy limt on Feb Hogs (HE) @ 66.400
Target @ 69.750
Stop @ 65.300
Buy limt on Feb Hogs (HE) @ 66.400
Target @ 69.750
Stop @ 65.300
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
A distinct range up effort overnight clearly helps the markets get beyond a patently disappointing US Non Farm payroll report from last Friday. However, with the earnings cycle kicking off later today and the Press once again playing up the need for top line growth, the bull camp would seem to be faced with another major test ahead. With the March S&P tracking toward the next even number resistance level of 1150, that could eventually present some type of technically topping threat. However, with the Dow sitting well under the 11,000 even number level on its charts, there would seem to be some moderate upside capacity before the upper end of the market runs into stiff technical resistance. With the March Nasdaq already testing the 1900 level in the early going today, it is possible that the lower end of the market will continue to lead the way higher. With a major brokerage firm overnight upgrading some oil sector issues, it would appear that the commodity/natural resources shares will be providing the market with some added bullish direction in the early action. With the only major economic development today, coming in the form of a Fed Speech just ahead of mid session, it is possible that the promise of lingering low rates will facilitate the bullish bias.
Dow:
The March Mini Dow has managed a definitive upside adjustment in the early action today, with the favorable Chinese export news fostering hope among the small and large cap issues. While the January 5th Commitment of Traders with Options report for Dow Jones Index $5 showed the Non-commercial position to be net long 20,882 contracts, with the Non-reportable position net long 3,870 contracts, and that made the 'combined' spec and fund position net long 24,752 contracts as of early last week, that reading is not so overbought that traders should take control of this market away from the bull camp.
Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside target is 10634. The next area of resistance is around 10607 and 10634, while 1st support hits today at 10525 and below there at 10469.
S&P:
The S&P sits just under the potentially critical 1150 even number level in the early trade today. We doubt that a quasi even number level on the charts is capable of capping off the pre-existing entrenched up trend pattern today, especially since the scheduled report slate is empty until the earnings season is kicked off later this afternoon. However, with the January 5th Commitment of Traders with Options report for S&P 500 Stock Index showing the Non-commercial position to be net long 4,922 contracts, with the Non-reportable position also net long 47,802 contracts, and that made the 'combined' spec and fund position net long only 52,724 contracts as of early last week. The record spec and fund long in the S&P is over 110,000 contracts and while the COT figures are probably understated due to the rally forged last week, we just don't think that the market is close to running out of upside buying fuel.
Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend. The close over the pivot swing is a somewhat positive setup. The near-term upside target is at 1149.68. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1146.87 and 1149.68, while 1st support hits today at 1136.13 and below there at 1128.19.
NASDAQ:
The March Nasdaq has already risen to the vicinity of the even number 1900 level on the charts in the early going today and seeing a rise above that critical chart level early this morning should mitigate concern that the market will run into trouble at that level. The January 5th Commitment of Traders with Options report for Nasdaq Mini showed the Non-commercial position to be net long 53,971 contracts, with the Non-reportable position net long 14,200 contracts, and that made the 'combined' spec and fund position net long 68,171 contracts as of early last week. Therefore the market isn't patently overbought and without the capacity to forge even more gains ahead. Critical support now moves up to 1893 level, with the top of the channel not seen until 1906.
Gold:
With very strong action seen in the Asian gold trade overnight, it is not surprising to see February gold forging a sharp range up trade this morning. In fact, February gold this morning has already risen to the highest level since December 8th off what seems to be a very favorable global macro economic outlook. Apparently a much stronger than expected Chinese export sales figure provided the trade with a fresh bullish view on the global recovery prospects and that report seems to have helped the markets get beyond the US payroll disappointment. It does seem as if the brunt of the buying overnight was the result of the sharp slide in the Dollar, which is apparently seeing a definitive liquidation effort off an increased desire for riskier instruments. While some of the buying interest in gold might be off hopes that leaving US rates low, will allow inflation to gain a foothold, it would not seem like inflation is a front page expectation this morning. However, seeing renewed interest in risky instruments might also rekindle investment interest in gold, which to a degree has been largely missing since the early December highs.
Silver:
With the sharp range up extension this morning, March silver managed to reach the highest level since December 4th. With the March silver contract also tracking toward the even number $19.00 level on the charts, it is possible that some traders will see that level as some form of critical pivot point. With copper and energy prices showing very impressive gains early this morning, it would appear that silver is set to get a lift from classic industrial commodity market action. Therefore, it would appear that silver is at least initially set to benefit from both its financial and physical commodity market standing. With the US economic report slate carrying only a third tier private employment report release this morning and the US earnings cycle not kicking off until late in the afternoon, there would not appear to be much in the way of scheduled news to alter the initial track of sentiment that is in place early this morning.
Crude:
Crude oil has been pushed to a new 15 month high overnight with price support coming from strong Chinese oil demand, a sharp break in the dollar, geopolitical supply risk and concerns over tightening motor fuel supplies. March crude oil took out last week's high on rising global oil demand prospects tied to news that China imported a record amount of oil last month. Oil has also likely seen support from news that China's exports jumped 17.7% in December compared to year ago raising optimism that the macro economic recovery being seen in China may be starting to spread more globally. Crude oil has been able to push aside last week's disappointing US payroll report and instead find price support from the retreat in the Dollar tied to renewed expectations for the Fed to keep interest rates low for some time, which is cultivating a bullish environment for commodities. Rising investor risk appetite tied to a weak Dollar and a higher equity/gold trade overnight is certainly boosting oil's appeal as an alternative investment with some of the buying in oil likely being inflation hedge related. Oil is also being pulled higher by the strength in the product markets with a refinery fire in Canada and glitches at US facilities raising concern over tightening fuel supplies since the US refinery operating rate is already so low. Even though temperatures are forecasted to turn warmer over the next couple of weeks, market focus already seems to be shifting to concerns over spring gasoline supplies. News of a militant attack at a Chevron pipeline in Nigeria that forced a cut in production has added geopolitical supply side risk into the equation. With March crude oil pushing above the $84.20 level overnight, there is little overhead resistance until $85.00 and above there not until $85.90. However, some caution is warranted given that short-term technical indicators are at overbought levels clearly being reflected in the January 5th COT report with options for crude oil showing the combined fund and spec net long position rising to 196,576 contracts as of early last week. In fact, the oil market is closing in on the record combined spec net long position of 203,568 contracts reached in November 2009. In fact the net spec long reading and may have already exceeded the record level given the rally in oil since the COT report was measured which to a certain extent, leaves the oil market vulnerable to profit taking. But since there are a variety of factors stacking up in the bull camp's corner, profit taking breaks in oil are likely to be short lived since the bullish environment for commodities will likely keep funds active buyers on price dips. Quarterly earnings starts this week and seeing companies beat Street estimates could certainly add another bullish element for oil into the mix. Given the oil market's firm bullish undertone, traders should continue to look for buying opportunities on price dips back to support levels.
Natural Gas:
February natural gas has been pushed lower in the early overnight trade on follow through selling from last week tied to a bearish shift in the weather. The strength in crude oil, a weak Dollar and perhaps expectations for a large storage draw down this week may be factors that have so far prevented February natural gas from falling below chart support near $5.50. But with private forecasters predicting a significant warm up in the second half of the month, it looks as if February natural gas likely set a near-term high last week. Temperatures in the Midwest and Northeast are expected to warm up from the frigid conditions seen last week while some weather forecasters have temperatures drifting up into the 40's over the next two weeks leaving downside price risk for natural gas in place. Outside market influences and expectations for a 200 plus bcf drain from storage in this week's inventory report may provide some limited price support to natural gas. There may also be some lingering concern over well head freezing disrupting production. But higher natural gas prices have lifted the number of natural gas rigs in operation to the highest level since last April, and there is the risk that the storage drain from winter fuel demand could be quickly replaced by rising fuel production unless industrial demand starts to recovery and so far there are no signs of that happening. The January 5th COT report with options for natural gas shows a bearish setup with funds adding to their net short position and small traders increasing their net long position leaving the market vulnerable to more small spec liquidation if support levels are violated. Unless the weather outlook turns more supportive again, we can't rule out an eventually retreat in February natural gas back to the $5.30 price level. Overhead resistance comes in near $5.66 then near $5.76 with support near $5.50 then near $5.31.
A distinct range up effort overnight clearly helps the markets get beyond a patently disappointing US Non Farm payroll report from last Friday. However, with the earnings cycle kicking off later today and the Press once again playing up the need for top line growth, the bull camp would seem to be faced with another major test ahead. With the March S&P tracking toward the next even number resistance level of 1150, that could eventually present some type of technically topping threat. However, with the Dow sitting well under the 11,000 even number level on its charts, there would seem to be some moderate upside capacity before the upper end of the market runs into stiff technical resistance. With the March Nasdaq already testing the 1900 level in the early going today, it is possible that the lower end of the market will continue to lead the way higher. With a major brokerage firm overnight upgrading some oil sector issues, it would appear that the commodity/natural resources shares will be providing the market with some added bullish direction in the early action. With the only major economic development today, coming in the form of a Fed Speech just ahead of mid session, it is possible that the promise of lingering low rates will facilitate the bullish bias.
Dow:
The March Mini Dow has managed a definitive upside adjustment in the early action today, with the favorable Chinese export news fostering hope among the small and large cap issues. While the January 5th Commitment of Traders with Options report for Dow Jones Index $5 showed the Non-commercial position to be net long 20,882 contracts, with the Non-reportable position net long 3,870 contracts, and that made the 'combined' spec and fund position net long 24,752 contracts as of early last week, that reading is not so overbought that traders should take control of this market away from the bull camp.
Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside target is 10634. The next area of resistance is around 10607 and 10634, while 1st support hits today at 10525 and below there at 10469.
S&P:
The S&P sits just under the potentially critical 1150 even number level in the early trade today. We doubt that a quasi even number level on the charts is capable of capping off the pre-existing entrenched up trend pattern today, especially since the scheduled report slate is empty until the earnings season is kicked off later this afternoon. However, with the January 5th Commitment of Traders with Options report for S&P 500 Stock Index showing the Non-commercial position to be net long 4,922 contracts, with the Non-reportable position also net long 47,802 contracts, and that made the 'combined' spec and fund position net long only 52,724 contracts as of early last week. The record spec and fund long in the S&P is over 110,000 contracts and while the COT figures are probably understated due to the rally forged last week, we just don't think that the market is close to running out of upside buying fuel.
Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend. The close over the pivot swing is a somewhat positive setup. The near-term upside target is at 1149.68. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1146.87 and 1149.68, while 1st support hits today at 1136.13 and below there at 1128.19.
NASDAQ:
The March Nasdaq has already risen to the vicinity of the even number 1900 level on the charts in the early going today and seeing a rise above that critical chart level early this morning should mitigate concern that the market will run into trouble at that level. The January 5th Commitment of Traders with Options report for Nasdaq Mini showed the Non-commercial position to be net long 53,971 contracts, with the Non-reportable position net long 14,200 contracts, and that made the 'combined' spec and fund position net long 68,171 contracts as of early last week. Therefore the market isn't patently overbought and without the capacity to forge even more gains ahead. Critical support now moves up to 1893 level, with the top of the channel not seen until 1906.
Gold:
With very strong action seen in the Asian gold trade overnight, it is not surprising to see February gold forging a sharp range up trade this morning. In fact, February gold this morning has already risen to the highest level since December 8th off what seems to be a very favorable global macro economic outlook. Apparently a much stronger than expected Chinese export sales figure provided the trade with a fresh bullish view on the global recovery prospects and that report seems to have helped the markets get beyond the US payroll disappointment. It does seem as if the brunt of the buying overnight was the result of the sharp slide in the Dollar, which is apparently seeing a definitive liquidation effort off an increased desire for riskier instruments. While some of the buying interest in gold might be off hopes that leaving US rates low, will allow inflation to gain a foothold, it would not seem like inflation is a front page expectation this morning. However, seeing renewed interest in risky instruments might also rekindle investment interest in gold, which to a degree has been largely missing since the early December highs.
Silver:
With the sharp range up extension this morning, March silver managed to reach the highest level since December 4th. With the March silver contract also tracking toward the even number $19.00 level on the charts, it is possible that some traders will see that level as some form of critical pivot point. With copper and energy prices showing very impressive gains early this morning, it would appear that silver is set to get a lift from classic industrial commodity market action. Therefore, it would appear that silver is at least initially set to benefit from both its financial and physical commodity market standing. With the US economic report slate carrying only a third tier private employment report release this morning and the US earnings cycle not kicking off until late in the afternoon, there would not appear to be much in the way of scheduled news to alter the initial track of sentiment that is in place early this morning.
Crude:
Crude oil has been pushed to a new 15 month high overnight with price support coming from strong Chinese oil demand, a sharp break in the dollar, geopolitical supply risk and concerns over tightening motor fuel supplies. March crude oil took out last week's high on rising global oil demand prospects tied to news that China imported a record amount of oil last month. Oil has also likely seen support from news that China's exports jumped 17.7% in December compared to year ago raising optimism that the macro economic recovery being seen in China may be starting to spread more globally. Crude oil has been able to push aside last week's disappointing US payroll report and instead find price support from the retreat in the Dollar tied to renewed expectations for the Fed to keep interest rates low for some time, which is cultivating a bullish environment for commodities. Rising investor risk appetite tied to a weak Dollar and a higher equity/gold trade overnight is certainly boosting oil's appeal as an alternative investment with some of the buying in oil likely being inflation hedge related. Oil is also being pulled higher by the strength in the product markets with a refinery fire in Canada and glitches at US facilities raising concern over tightening fuel supplies since the US refinery operating rate is already so low. Even though temperatures are forecasted to turn warmer over the next couple of weeks, market focus already seems to be shifting to concerns over spring gasoline supplies. News of a militant attack at a Chevron pipeline in Nigeria that forced a cut in production has added geopolitical supply side risk into the equation. With March crude oil pushing above the $84.20 level overnight, there is little overhead resistance until $85.00 and above there not until $85.90. However, some caution is warranted given that short-term technical indicators are at overbought levels clearly being reflected in the January 5th COT report with options for crude oil showing the combined fund and spec net long position rising to 196,576 contracts as of early last week. In fact, the oil market is closing in on the record combined spec net long position of 203,568 contracts reached in November 2009. In fact the net spec long reading and may have already exceeded the record level given the rally in oil since the COT report was measured which to a certain extent, leaves the oil market vulnerable to profit taking. But since there are a variety of factors stacking up in the bull camp's corner, profit taking breaks in oil are likely to be short lived since the bullish environment for commodities will likely keep funds active buyers on price dips. Quarterly earnings starts this week and seeing companies beat Street estimates could certainly add another bullish element for oil into the mix. Given the oil market's firm bullish undertone, traders should continue to look for buying opportunities on price dips back to support levels.
Natural Gas:
February natural gas has been pushed lower in the early overnight trade on follow through selling from last week tied to a bearish shift in the weather. The strength in crude oil, a weak Dollar and perhaps expectations for a large storage draw down this week may be factors that have so far prevented February natural gas from falling below chart support near $5.50. But with private forecasters predicting a significant warm up in the second half of the month, it looks as if February natural gas likely set a near-term high last week. Temperatures in the Midwest and Northeast are expected to warm up from the frigid conditions seen last week while some weather forecasters have temperatures drifting up into the 40's over the next two weeks leaving downside price risk for natural gas in place. Outside market influences and expectations for a 200 plus bcf drain from storage in this week's inventory report may provide some limited price support to natural gas. There may also be some lingering concern over well head freezing disrupting production. But higher natural gas prices have lifted the number of natural gas rigs in operation to the highest level since last April, and there is the risk that the storage drain from winter fuel demand could be quickly replaced by rising fuel production unless industrial demand starts to recovery and so far there are no signs of that happening. The January 5th COT report with options for natural gas shows a bearish setup with funds adding to their net short position and small traders increasing their net long position leaving the market vulnerable to more small spec liquidation if support levels are violated. Unless the weather outlook turns more supportive again, we can't rule out an eventually retreat in February natural gas back to the $5.30 price level. Overhead resistance comes in near $5.66 then near $5.76 with support near $5.50 then near $5.31.
Friday, January 8, 2010
QG Stopped Out
Well we could never seem to get a move down to test the early morning lows. Its a shame to end the week on a loser but its been a profitable week with 2 out of 3 trades as winners. That will be it for today as I don't want to get stuck holding a postion through the weekend. So I wish everybody a safe and happy weekend. And we will see you back for another run on monday.
Out at 5.760 for a loss of $600
Weekly totals
EX-1 = $1684.50 (+16.85%)
EX-2 = $1052.00 (+10.52%)
Out at 5.760 for a loss of $600
Weekly totals
EX-1 = $1684.50 (+16.85%)
EX-2 = $1052.00 (+10.52%)
QG Entry
Symbol: QG
Chart: 5m
Entry: Sell stop @ 5.685
Stop: 5.755
Target 1: 5.620
Target 2: 5.545
Target 3: 5.420
Chart: 5m
Entry: Sell stop @ 5.685
Stop: 5.755
Target 1: 5.620
Target 2: 5.545
Target 3: 5.420
Watching Nat Gas
The morning session is another chop fest but we are tracking a short entry on Nat Gas (QG) on the 5m chart.
Swing Furutes Entry
We are putting the long feb hog trade back to work today.
Buy limt on Feb Hogs (HE) @ 66.400
Target @ 69.750
Stop @ 65.300
Buy limt on Feb Hogs (HE) @ 66.400
Target @ 69.750
Stop @ 65.300
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
While some market measures have managed a fresh new high for the move in the overnight trade, there is certainly the prospect for a significant volatility event in the wake of the US Non farm payroll report. Normally one would look at the rather stellar action in the equity markets and suggest that the trade is fully expecting something positive from the US payroll report. Apparently the market is garnering some support from early strength in bank and financial sector shares overnight. The positive overnight bias in stock prices is somewhat surprising in the wake of suggestions from the French Prime Minister that a new crisis in the global economy would probably be fatal! Nonetheless the trade seems to be holding out hope that the US economy is going to show further improvement today and we would suggest that improvement will be determined by the Non farm payroll reading coming in better than the prior month's 11,000 job decline. All things considered, one has to think that the bull camp has more risk than the bear camp into the number this morning and that anything less than a positive jobs figure might be cause for some minor profit taking.
Dow:
While the March Mini Dow did make a fresh new high for the move overnight and the index seems to have lost its lagging status to the rest of the market, we still get the feeling that the bull camp needs a perfect storm from the data to avoid a temporary correction. However, this market has been able to shake off negatives recently and in many cases actually spin negatives into positives and in the face of a slightly discouraging reading this morning, we would not expect to see an aggressive setback. In fact, it is likely that weakness off the numbers will be seen as a buying opportunity by money on the sidelines. In short, we think the risk is higher to the longs into the number today but unless the numbers are really bad, the pain felt by the longs might not be that severe.
The market made a new contract high on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. The outside day up is somewhat positive. The market setup is supportive for early gains with the close over the 1st swing resistance. The near-term upside target is at 10638. The next area of resistance is around 10607 and 10638, while 1st support hits today at 10499 and below there at 10421.
S&P:
The March S&P would seem to sit perched on a high shelf into the potentially critical Non farm payroll report. As suggested already, the S&P would seem to have priced in an actual gain in payrolls already this morning. However, as mentioned before we doubt this market is going to come under sustained and aggressive liquidation pressure in the face of a disappointing number. On the other hand, if the November reading is revised significantly higher and the December number shows losses in excess of 20,000 jobs that could set the stage for a 2-3 day corrective slide, that could be bought sometime early next week. If we were long S&P futures, we would consider selling a call and buying a put for the post report release reaction.
The market rallied to a new contract high. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The close above the 9-day moving average is a positive short-term indicator for trend. The outside day up is somewhat positive. The market setup is supportive for early gains with the close over the 1st swing resistance. The next upside target is 1146.93. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1143.37 and 1146.93, while 1st support hits today at 1131.63 and below there at 1123.44.
NASDAQ:
The Nasdaq has certainly shown some corrective action and in some ways the Nasdaq has been the worst performing sector of the market over the last 48 hours of trade. Apparently the tech frenzy from the trade shown early in the week left that market segment overbought and perhaps in need of something distinctly up beat from the US payroll report. While we doubt that the March Nasdaq will fall below critical support at 1866.50 today, failing at that level would not be a good technical trade for the bull camp. We hate to fade the up trend pattern but the weakness in the Nasdaq (which has been the leadership market) into the numbers this week would seem to be a signal for a possible temporary spike down move to 1850. A spike down to 1850 should be considered an opportunity to get long this market at a very good level.
Gold:
In retrospect, the gold market has seen stories from all over the map this week. On one hand, the gold market saw signs that the Chinese were set to tighten credit conditions, but that potentially negative development was at least partially offset by a series of favorable Chinese retail gold demand stories and what appeared to be a very broad based commodity fund buying wave. The February gold contract sits above the 21 day moving average early this morning, which is located down at $1,113.10 today. As usual the trade will probably look to the direction of the Dollar today for guidance on gold prices. Some traders suggest that gold needs a not too hot and not too cold set of figures today, to come away from the reports with a positive track. However, some gold bulls are suggesting that the gold market is capable of de-linking with the Dollar, but that relationship has remained pretty strong lately. The bear camp is suggesting that the rally off the December lows leaves the gold market a bit vulnerable from a technical perspective today and with February gold contract starting the trading session out today right on the 50 day moving average there does appear to be the prospect for a significant technical decision today.
Silver:
The March silver contract in the early trade today sits roughly $1.37 an ounce above the late December lows. As in the gold market, the silver trade would seem to be poised to take a large measure of direction from the Dollar in the wake of the US Non farm payroll report this morning. While the gold market sits right on its 50 day moving average this morning, the March silver contract comes into the action today well above its 50 day moving average. Noted weakness in the copper market over the last 36 hours is probably serving as a slight outside market negative to silver prices today, especially since silver at times this week seemed to be attempting to embrace its industrial standing. While there was a modest decline in silver exchange warehouse stocks overnight, the silver market hasn't recently given that much credence to classic physical supply side developments. The bull camp is suggesting that silver stands a much better chance of de-linking with the Dollar today than the gold market, as silver managed to outperform gold on a number of occasions earlier in the week.
Crude:
While crude oil has traded a bit softer overnight, so far there hasn't been too much conviction behind the selling as the price action remains choppy ahead of today's critical employment report. Indications that the CFTC next week will propose limits on futures positions in energy may be undermining sentiment a bit. Crude oil has become technically overbought on the steep rally from the December lows and the market still looks to be under the profit taking influence inspired by yesterday's news that China raised rates leaving the global oil demand outlook a bit uncertain. China has been a major consumer of oil last year leading the global recovery and there are now some concerns that tightening liquidity could dent oil demand growth. But fears over China's oil demand should be tempered on news that Chinese refineries will be running at a record operating rate partly due to expectation of rising gasoline demand since auto sales are expected to remain robust this year. Frigid temperatures blanketing a good portion of the US have also supported the rally in oil over the last month on expectations of rising winter heating fuel demand. But with temperatures expected to moderate next week, that outlook has also given traders a reason to book profits. But the majority of gains in the oil markets from the December low have been based on signs that macro economic conditions are improving which is raising optimism for a strong recovery in oil demand. Most of the economic news over the last month has come in better than expected which has revived bullish sentiment and is attracting an influx of fund money back into the oil markets. Therefore, today's employment report has the potential to be a big market mover. Given the improvements in a variety of economic data last month and since jobless claims have declined considerably, some traders seem to be expecting a small rise in payrolls which would be the first gain in about two years. While the bull camp has the oil market's overbought status working against it, we don't think it will be enough of a limitation to prevent a strong upward move in crude oil on good economic news, especially if the employment data reveals a positive surprise. However, since the oil market is overbought, there is also a good chance that disappointing payroll news could inspire more extensive profit taking. After the initial reaction to the jobs report, outside market influences could also add to oil market volatility. Today's economic news has the potential to push crude oil in either direction, and traders may get a chance to buy March crude oil closer to $80 per barrel price. But we also suspect a price brake in crude oil off of a disappointing jobs report will end up being short lived given the firm bullish undertone the market seems to possess.
Natural Gas:
February natural gas has seen a two sided trade overnight, but so far the market still looks to be off balance following yesterday's sell off tied to a moderating weather forecast and a somewhat disappointing storage report. Yesterday, February natural gas hit the highest price level since last October on concerns that frigid temperatures this week could freeze well heads and disrupt production forcing fuel end users to withdraw supplies from storage. But with most weather forecasters now predicting a moderation in temperatures next week from the frigid cold seen recently to more seasonal readings certainly has the potential to limit the upside for natural gas. We also suspect part of the selling yesterday was tied to the natural gas storage report showing a draw down of 153 bcf which was in line with most traders' expectation, but a lack of a big bullish surprise seemed to disappoint some traders and inspire profit taking. Expectations for next week's storage report to show a 200 plus bcf draw should underpin natural gas prices to a certain extent. Today's US employment report also has the potential to be a big market mover. But with the temperature outlook turning a bit less supportive next week, we suspect February natural gas will continue to have difficulty sustaining rally attempts above the critical $6.00 unless a more positive outlook for a recovery in industrial fuel demand starts to take hold. While February natural gas may still have the technical potential to rally back above $6.00 if the employment data is bullish, we remain skeptical the market will be able to hold at higher levels. On the other hand, there should be enough weather uncertainty to limit the downside in February natural gas to the $5.50 to $5.40 price range.
While some market measures have managed a fresh new high for the move in the overnight trade, there is certainly the prospect for a significant volatility event in the wake of the US Non farm payroll report. Normally one would look at the rather stellar action in the equity markets and suggest that the trade is fully expecting something positive from the US payroll report. Apparently the market is garnering some support from early strength in bank and financial sector shares overnight. The positive overnight bias in stock prices is somewhat surprising in the wake of suggestions from the French Prime Minister that a new crisis in the global economy would probably be fatal! Nonetheless the trade seems to be holding out hope that the US economy is going to show further improvement today and we would suggest that improvement will be determined by the Non farm payroll reading coming in better than the prior month's 11,000 job decline. All things considered, one has to think that the bull camp has more risk than the bear camp into the number this morning and that anything less than a positive jobs figure might be cause for some minor profit taking.
Dow:
While the March Mini Dow did make a fresh new high for the move overnight and the index seems to have lost its lagging status to the rest of the market, we still get the feeling that the bull camp needs a perfect storm from the data to avoid a temporary correction. However, this market has been able to shake off negatives recently and in many cases actually spin negatives into positives and in the face of a slightly discouraging reading this morning, we would not expect to see an aggressive setback. In fact, it is likely that weakness off the numbers will be seen as a buying opportunity by money on the sidelines. In short, we think the risk is higher to the longs into the number today but unless the numbers are really bad, the pain felt by the longs might not be that severe.
The market made a new contract high on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. The outside day up is somewhat positive. The market setup is supportive for early gains with the close over the 1st swing resistance. The near-term upside target is at 10638. The next area of resistance is around 10607 and 10638, while 1st support hits today at 10499 and below there at 10421.
S&P:
The March S&P would seem to sit perched on a high shelf into the potentially critical Non farm payroll report. As suggested already, the S&P would seem to have priced in an actual gain in payrolls already this morning. However, as mentioned before we doubt this market is going to come under sustained and aggressive liquidation pressure in the face of a disappointing number. On the other hand, if the November reading is revised significantly higher and the December number shows losses in excess of 20,000 jobs that could set the stage for a 2-3 day corrective slide, that could be bought sometime early next week. If we were long S&P futures, we would consider selling a call and buying a put for the post report release reaction.
The market rallied to a new contract high. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The close above the 9-day moving average is a positive short-term indicator for trend. The outside day up is somewhat positive. The market setup is supportive for early gains with the close over the 1st swing resistance. The next upside target is 1146.93. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1143.37 and 1146.93, while 1st support hits today at 1131.63 and below there at 1123.44.
NASDAQ:
The Nasdaq has certainly shown some corrective action and in some ways the Nasdaq has been the worst performing sector of the market over the last 48 hours of trade. Apparently the tech frenzy from the trade shown early in the week left that market segment overbought and perhaps in need of something distinctly up beat from the US payroll report. While we doubt that the March Nasdaq will fall below critical support at 1866.50 today, failing at that level would not be a good technical trade for the bull camp. We hate to fade the up trend pattern but the weakness in the Nasdaq (which has been the leadership market) into the numbers this week would seem to be a signal for a possible temporary spike down move to 1850. A spike down to 1850 should be considered an opportunity to get long this market at a very good level.
Gold:
In retrospect, the gold market has seen stories from all over the map this week. On one hand, the gold market saw signs that the Chinese were set to tighten credit conditions, but that potentially negative development was at least partially offset by a series of favorable Chinese retail gold demand stories and what appeared to be a very broad based commodity fund buying wave. The February gold contract sits above the 21 day moving average early this morning, which is located down at $1,113.10 today. As usual the trade will probably look to the direction of the Dollar today for guidance on gold prices. Some traders suggest that gold needs a not too hot and not too cold set of figures today, to come away from the reports with a positive track. However, some gold bulls are suggesting that the gold market is capable of de-linking with the Dollar, but that relationship has remained pretty strong lately. The bear camp is suggesting that the rally off the December lows leaves the gold market a bit vulnerable from a technical perspective today and with February gold contract starting the trading session out today right on the 50 day moving average there does appear to be the prospect for a significant technical decision today.
Silver:
The March silver contract in the early trade today sits roughly $1.37 an ounce above the late December lows. As in the gold market, the silver trade would seem to be poised to take a large measure of direction from the Dollar in the wake of the US Non farm payroll report this morning. While the gold market sits right on its 50 day moving average this morning, the March silver contract comes into the action today well above its 50 day moving average. Noted weakness in the copper market over the last 36 hours is probably serving as a slight outside market negative to silver prices today, especially since silver at times this week seemed to be attempting to embrace its industrial standing. While there was a modest decline in silver exchange warehouse stocks overnight, the silver market hasn't recently given that much credence to classic physical supply side developments. The bull camp is suggesting that silver stands a much better chance of de-linking with the Dollar today than the gold market, as silver managed to outperform gold on a number of occasions earlier in the week.
Crude:
While crude oil has traded a bit softer overnight, so far there hasn't been too much conviction behind the selling as the price action remains choppy ahead of today's critical employment report. Indications that the CFTC next week will propose limits on futures positions in energy may be undermining sentiment a bit. Crude oil has become technically overbought on the steep rally from the December lows and the market still looks to be under the profit taking influence inspired by yesterday's news that China raised rates leaving the global oil demand outlook a bit uncertain. China has been a major consumer of oil last year leading the global recovery and there are now some concerns that tightening liquidity could dent oil demand growth. But fears over China's oil demand should be tempered on news that Chinese refineries will be running at a record operating rate partly due to expectation of rising gasoline demand since auto sales are expected to remain robust this year. Frigid temperatures blanketing a good portion of the US have also supported the rally in oil over the last month on expectations of rising winter heating fuel demand. But with temperatures expected to moderate next week, that outlook has also given traders a reason to book profits. But the majority of gains in the oil markets from the December low have been based on signs that macro economic conditions are improving which is raising optimism for a strong recovery in oil demand. Most of the economic news over the last month has come in better than expected which has revived bullish sentiment and is attracting an influx of fund money back into the oil markets. Therefore, today's employment report has the potential to be a big market mover. Given the improvements in a variety of economic data last month and since jobless claims have declined considerably, some traders seem to be expecting a small rise in payrolls which would be the first gain in about two years. While the bull camp has the oil market's overbought status working against it, we don't think it will be enough of a limitation to prevent a strong upward move in crude oil on good economic news, especially if the employment data reveals a positive surprise. However, since the oil market is overbought, there is also a good chance that disappointing payroll news could inspire more extensive profit taking. After the initial reaction to the jobs report, outside market influences could also add to oil market volatility. Today's economic news has the potential to push crude oil in either direction, and traders may get a chance to buy March crude oil closer to $80 per barrel price. But we also suspect a price brake in crude oil off of a disappointing jobs report will end up being short lived given the firm bullish undertone the market seems to possess.
Natural Gas:
February natural gas has seen a two sided trade overnight, but so far the market still looks to be off balance following yesterday's sell off tied to a moderating weather forecast and a somewhat disappointing storage report. Yesterday, February natural gas hit the highest price level since last October on concerns that frigid temperatures this week could freeze well heads and disrupt production forcing fuel end users to withdraw supplies from storage. But with most weather forecasters now predicting a moderation in temperatures next week from the frigid cold seen recently to more seasonal readings certainly has the potential to limit the upside for natural gas. We also suspect part of the selling yesterday was tied to the natural gas storage report showing a draw down of 153 bcf which was in line with most traders' expectation, but a lack of a big bullish surprise seemed to disappoint some traders and inspire profit taking. Expectations for next week's storage report to show a 200 plus bcf draw should underpin natural gas prices to a certain extent. Today's US employment report also has the potential to be a big market mover. But with the temperature outlook turning a bit less supportive next week, we suspect February natural gas will continue to have difficulty sustaining rally attempts above the critical $6.00 unless a more positive outlook for a recovery in industrial fuel demand starts to take hold. While February natural gas may still have the technical potential to rally back above $6.00 if the employment data is bullish, we remain skeptical the market will be able to hold at higher levels. On the other hand, there should be enough weather uncertainty to limit the downside in February natural gas to the $5.50 to $5.40 price range.
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