Tuesday, January 5, 2010
Watching Dow (YM)
Lots of chop this morning. We had a few things look like they were setting up but never got an entry. I am now tracking the YM for a short on the 5m.
GC Stopped out of final 3rd
Well gold pulled back leading into the NY open so we got stopped out of our final 3rd @ 1118.20
Overall it was a great first trade.
After comission net:
Ex-1 = $1939.00
Ex-2 = $1419.00
Overall it was a great first trade.
After comission net:
Ex-1 = $1939.00
Ex-2 = $1419.00
Swing Futures Entry
We are puting our feb Hog trade back to work today.
Buy limit 64.800
Stop 63.600
Target 67.700
Buy limit 64.800
Stop 63.600
Target 67.700
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
It would appear that last week's lows have become a little more entrenched as some form of support in the wake of the sharp recoil from the recent lows especially in the wake of subsequent suggestions from the Fed that low rates will still be needed for an extended period of time. It is possible that the trade saw the extended string of declines in US Construction Spending report yesterday as a sign that pockets of noted weakness remain in the US economy. With the Dollar showing more weakness this morning (but not too much weakness) it is possible that some foreign players are seeing US Treasury yields as attractive. With US pending home sales expected to be down this morning and Factory Orders expected to rise marginally, it is possible that Treasuries will be presented with a similar data flow as was seen in the prior trading session and yet prices were able to rally yesterday. However, the early potential to rally might be truncated quickly in the face of favorable US auto sales data that is due later in the trading session. We think that the trade is having second thoughts about keeping prices down hard into the non farm payroll report, as a March Note price sitting at 115-00, or a March Bond price down at 114-22 would probably result in a significant short covering rally in the face of any payroll gain in excess of the prior months -11,000 figure. However, the payroll report is a long way off in terms of market developments, with an active slate of data due in every day, upcoming supply terms to be announced and another round of initial and ongoing claims all scheduled before the monthly numbers take center stage. We would suggest that traders monitor the correlation between a slightly weaker Dollar and marginally higher Treasury prices, as some foreign interests might be picking up some yield. While the December 29th Commitment of Traders with Options report for U.S. Treasury Bonds showed the Non-commercial position to be net short 101,474 contracts, with the Non-reportable position also net short 11,480 contracts, and that made the 'combined' spec and fund position net short 112,954 contracts as of early last week, that reading is only marginally supportive to the market. Similarly the 10 Year Notes showed a 'combined' spec and fund position that was net short 196,688 contracts as of early last week, which is a partially oversold condition, but certainly not an extreme positioning. While we see the scope for a slight short covering bounce to perhaps the 116-00 level in March bonds and to 116-04 in March Notes, it is likely that the market will generally remain hemmed in ahead of the Friday payroll report. If fact, the short covering bias might have the edge, unless the scheduled numbers this morning both come in better than expected. Perhaps some in the trade are looking ahead to the release of the FOMC meeting minutes on Wednesday, as many in the trade think that those minutes will continue to highlight a Fed that conclusively wants to keep the Fed funds rate down. With the Fed's Duke reiterating the low rate mantra again yesterday that probably telegraphs the rest of the Fed's intentions, especially since Duke suggested that the 'FOMC' wanted to keep rates down. In conclusion, a minor short covering tilt is in place, as the market banks profits off the sharp December slide.
Dow:
The market rallied to a new contract high. A bullish signal was given with an upside crossover of the daily stochastics. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market now above the 18-day moving average suggests the intermediate-term trend has turned up. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside target is 10656. The next area of resistance is around 10601 and 10656, while 1st support hits today at 10437 and below there at 10329.
S&P:
A new contract high was made on the rally. The crossover up in the daily stochastics is a bullish signal. 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. A positive setup occurred with the close over the 1st swing resistance. The next upside objective is 1141.62. The next area of resistance is around 1137.00 and 1141.62, while 1st support hits today at 1120.50 and below there at 1108.63.
Gold:
Despite a recovery in the Dollar from an initial sharp washout, February gold prices this morning still managed to reach the highest level since December 17th. However, the Dollar recovery clearly prompted February gold to fall back by roughly $6 an ounce from the early highs. With Indian gold prices extending a recent string of positive trading session's overnight and the Dollar still technically lower on the day, the bull camp has seemingly maintained a foothold. However, some gold traders might be a little discouraged by the news of an annual decline in Turkish gold imports for all of 2009. On the other hand, the gold market recently hasn't exactly been overly interested in classic physical demand side stories. The December 29th Commitment of Traders with Options report for Gold showed the Non-commercial position to be net long 241,946 contracts, with the Non-reportable position also net long 51,506 contracts, and that made those two 'combined' positions net long 293,452 contracts as of early last week. Therefore, some traders are probably relieved that the spec long positioning has retrenched further from the extreme positioning that was recorded in the October 20th, 2009 COT report. In the end, the Dollar looks to remain the primary focal point of the gold trade and that in turn might make the scheduled US data flows critical very to the ebb and flow of gold prices today.
Silver:
With March silver managing another new high for the move this morning and is seemingly managing to hold a good portion of those gains, it would seem like silver is performing relatively better than gold in the early trade. Once again, the silver market is seeing Press coverage that touts silver to outperform gold in the coming year, but it would appear that silver is also getting a measure of classic technically orientated short covering buying interest in this morning's trade. While the gold trade saw some evidence of long liquidation in the most recent COT positioning report, the silver market really didn't see much of a change in its spec positioning. However, the bull camp in silver will suggest that silver wasn't as historically overbought as the gold market and therefore ongoing liquidation of the long positioning in silver wasn't as likely. Unfortunately for the bull camp in silver, copper prices are weaker this morning and equity prices are somewhat mixed and that would seem to leave the industrial tilt in silver a little suspect. In the end, silver seems to need further weakness in the Dollar and distinctly positive leadership from gold to maintain the recent bullish tilt.
Crude:
While crude oil still has a number of factors working in the bull camp's favor that could eventually lift it above the October high, this market is also looking a bit vulnerable to profit taking. February crude oil pushed to a new high for the move in the overnight trade with price support coming from a weaker Dollar, a cold temperature forecast and lingering macro economic optimism for a recovery in fuel demand this year. But so far tough resistance at the $82 price level has held and the oil market may need a new bullish catalyst after eight straight up sessions to inspire fresh buying conviction up at these higher price levels. Today's reports on factory orders and pending home sales will provide more economic insight that's likely to impact oil trading this session. But there is the risk of profit taking in the oil market surfacing especially if there isn't a steady stream of bullish economic news flow. Oil has certainly been supported overnight by the weaker trade in the Dollar, but we are concerned that some trader will be quick to take profits in oil if the Dollar continues to recover from overnight lows to trade higher this session. The December 29th COT report with options for crude oil also reflects a market that has become short-term overbought as managed money funds have boosted their net long position in oil sharply since the mid-December low raising the non-commercial net long position to 162,740 contracts as of early last week which is understated given that the market has rallied over $3 from where the report was measured. Given the market's technical condition, February crude oil is at risk of giving back a portion of yesterday's gains. But the market's background remains bullish and therefore, profit taking breaks in oil are likely to be short lived and should be considered buying opportunities. Positioning ahead of this week's inventory report may also result in more of a two sided trade this session with most traders expecting near unchanged levels in oil stocks, but another sizable decline in heating fuel supplies. The cold weather forecast should continue to trim back the glut in distillate stocks and that's likely to outweigh a rebuild in oil supplies if it occurs. We also suspect the downside will be limited by a more optimistic macro economic view, starting to take hold along with the geopolitical risk factor from Iran. While we don't want to be short crude oil, we do recognize the market's increasing technical vulnerability. Therefore, long position holders in crude oil should have some protection in place in case profit taking surfaces and turns active this session. Traders looking to get long may soon get a chance to buy crude oil closer to the $80 price level. Support points for February crude oil come in at $81.35 then near $81.10 and below there near $80.75 with resistance at $82 then near $82.30.
Natural Gas:
Natural gas has pulled back a bit in the overnight trade after yesterday's big gains and it is somewhat disappointing that the market hasn't been able to make a run back to the $6.00 price level despite a variety of positives being thrown at it. So far, February natural gas hasn't been able to follow through higher despite the extended cold weather forecast that's starting to stretch into the second half of January. Most weather forecasters are predicting below normal and at times frigid temperatures in key US heating regions through January 19th. Therefore, it's a bit surprising natural gas hasn't seen more upside mileage from expectations higher winter heating demand will help trim the storage supply glut. It also doesn't seem as if the market's outlook for industrial fuel demand has improved too much despite signs that economic conditions are improving including a higher reading in yesterday's ISM manufacturing index. But on the other hand, after the last two reports on natural gas storage came in below expectations despite the cold weather, doubts remain as to whether demand for natural gas can recover enough to outpace supply, especially since gas producers could be motivated to increase production if fuel prices rise above the $6.00 breakeven threshold. The December 29th COT report with options for natural gas showed managed money funds increasing their net short position by 3,242 contracts to 27,225 contracts net short. Therefore, it may take more convincing evidence that fuel demand is starting to recovery before funds are motivated to get out of short positions and enable February natural gas to make a decisive push above the $6.00 price level. Today's reports on factory orders and pending home sales will provide more economic insight that could impact natural gas trade this session. But we suspect a much larger than expected storage decline in this week's inventory report will need to be seen in order to provide enough of a bullish catalyst to push February natural gas above last week's high. While it is certainly risky to be short natural gas given the temperature outlook, this market seems to lack the bullish momentum right now to make a push through overhead resistance. Therefore, we get the sense that February natural gas may be confined within a $5.50 to $6.00 price range ahead of this week's storage report.
It would appear that last week's lows have become a little more entrenched as some form of support in the wake of the sharp recoil from the recent lows especially in the wake of subsequent suggestions from the Fed that low rates will still be needed for an extended period of time. It is possible that the trade saw the extended string of declines in US Construction Spending report yesterday as a sign that pockets of noted weakness remain in the US economy. With the Dollar showing more weakness this morning (but not too much weakness) it is possible that some foreign players are seeing US Treasury yields as attractive. With US pending home sales expected to be down this morning and Factory Orders expected to rise marginally, it is possible that Treasuries will be presented with a similar data flow as was seen in the prior trading session and yet prices were able to rally yesterday. However, the early potential to rally might be truncated quickly in the face of favorable US auto sales data that is due later in the trading session. We think that the trade is having second thoughts about keeping prices down hard into the non farm payroll report, as a March Note price sitting at 115-00, or a March Bond price down at 114-22 would probably result in a significant short covering rally in the face of any payroll gain in excess of the prior months -11,000 figure. However, the payroll report is a long way off in terms of market developments, with an active slate of data due in every day, upcoming supply terms to be announced and another round of initial and ongoing claims all scheduled before the monthly numbers take center stage. We would suggest that traders monitor the correlation between a slightly weaker Dollar and marginally higher Treasury prices, as some foreign interests might be picking up some yield. While the December 29th Commitment of Traders with Options report for U.S. Treasury Bonds showed the Non-commercial position to be net short 101,474 contracts, with the Non-reportable position also net short 11,480 contracts, and that made the 'combined' spec and fund position net short 112,954 contracts as of early last week, that reading is only marginally supportive to the market. Similarly the 10 Year Notes showed a 'combined' spec and fund position that was net short 196,688 contracts as of early last week, which is a partially oversold condition, but certainly not an extreme positioning. While we see the scope for a slight short covering bounce to perhaps the 116-00 level in March bonds and to 116-04 in March Notes, it is likely that the market will generally remain hemmed in ahead of the Friday payroll report. If fact, the short covering bias might have the edge, unless the scheduled numbers this morning both come in better than expected. Perhaps some in the trade are looking ahead to the release of the FOMC meeting minutes on Wednesday, as many in the trade think that those minutes will continue to highlight a Fed that conclusively wants to keep the Fed funds rate down. With the Fed's Duke reiterating the low rate mantra again yesterday that probably telegraphs the rest of the Fed's intentions, especially since Duke suggested that the 'FOMC' wanted to keep rates down. In conclusion, a minor short covering tilt is in place, as the market banks profits off the sharp December slide.
Dow:
The market rallied to a new contract high. A bullish signal was given with an upside crossover of the daily stochastics. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market now above the 18-day moving average suggests the intermediate-term trend has turned up. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside target is 10656. The next area of resistance is around 10601 and 10656, while 1st support hits today at 10437 and below there at 10329.
S&P:
A new contract high was made on the rally. The crossover up in the daily stochastics is a bullish signal. 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. A positive setup occurred with the close over the 1st swing resistance. The next upside objective is 1141.62. The next area of resistance is around 1137.00 and 1141.62, while 1st support hits today at 1120.50 and below there at 1108.63.
Gold:
Despite a recovery in the Dollar from an initial sharp washout, February gold prices this morning still managed to reach the highest level since December 17th. However, the Dollar recovery clearly prompted February gold to fall back by roughly $6 an ounce from the early highs. With Indian gold prices extending a recent string of positive trading session's overnight and the Dollar still technically lower on the day, the bull camp has seemingly maintained a foothold. However, some gold traders might be a little discouraged by the news of an annual decline in Turkish gold imports for all of 2009. On the other hand, the gold market recently hasn't exactly been overly interested in classic physical demand side stories. The December 29th Commitment of Traders with Options report for Gold showed the Non-commercial position to be net long 241,946 contracts, with the Non-reportable position also net long 51,506 contracts, and that made those two 'combined' positions net long 293,452 contracts as of early last week. Therefore, some traders are probably relieved that the spec long positioning has retrenched further from the extreme positioning that was recorded in the October 20th, 2009 COT report. In the end, the Dollar looks to remain the primary focal point of the gold trade and that in turn might make the scheduled US data flows critical very to the ebb and flow of gold prices today.
Silver:
With March silver managing another new high for the move this morning and is seemingly managing to hold a good portion of those gains, it would seem like silver is performing relatively better than gold in the early trade. Once again, the silver market is seeing Press coverage that touts silver to outperform gold in the coming year, but it would appear that silver is also getting a measure of classic technically orientated short covering buying interest in this morning's trade. While the gold trade saw some evidence of long liquidation in the most recent COT positioning report, the silver market really didn't see much of a change in its spec positioning. However, the bull camp in silver will suggest that silver wasn't as historically overbought as the gold market and therefore ongoing liquidation of the long positioning in silver wasn't as likely. Unfortunately for the bull camp in silver, copper prices are weaker this morning and equity prices are somewhat mixed and that would seem to leave the industrial tilt in silver a little suspect. In the end, silver seems to need further weakness in the Dollar and distinctly positive leadership from gold to maintain the recent bullish tilt.
Crude:
While crude oil still has a number of factors working in the bull camp's favor that could eventually lift it above the October high, this market is also looking a bit vulnerable to profit taking. February crude oil pushed to a new high for the move in the overnight trade with price support coming from a weaker Dollar, a cold temperature forecast and lingering macro economic optimism for a recovery in fuel demand this year. But so far tough resistance at the $82 price level has held and the oil market may need a new bullish catalyst after eight straight up sessions to inspire fresh buying conviction up at these higher price levels. Today's reports on factory orders and pending home sales will provide more economic insight that's likely to impact oil trading this session. But there is the risk of profit taking in the oil market surfacing especially if there isn't a steady stream of bullish economic news flow. Oil has certainly been supported overnight by the weaker trade in the Dollar, but we are concerned that some trader will be quick to take profits in oil if the Dollar continues to recover from overnight lows to trade higher this session. The December 29th COT report with options for crude oil also reflects a market that has become short-term overbought as managed money funds have boosted their net long position in oil sharply since the mid-December low raising the non-commercial net long position to 162,740 contracts as of early last week which is understated given that the market has rallied over $3 from where the report was measured. Given the market's technical condition, February crude oil is at risk of giving back a portion of yesterday's gains. But the market's background remains bullish and therefore, profit taking breaks in oil are likely to be short lived and should be considered buying opportunities. Positioning ahead of this week's inventory report may also result in more of a two sided trade this session with most traders expecting near unchanged levels in oil stocks, but another sizable decline in heating fuel supplies. The cold weather forecast should continue to trim back the glut in distillate stocks and that's likely to outweigh a rebuild in oil supplies if it occurs. We also suspect the downside will be limited by a more optimistic macro economic view, starting to take hold along with the geopolitical risk factor from Iran. While we don't want to be short crude oil, we do recognize the market's increasing technical vulnerability. Therefore, long position holders in crude oil should have some protection in place in case profit taking surfaces and turns active this session. Traders looking to get long may soon get a chance to buy crude oil closer to the $80 price level. Support points for February crude oil come in at $81.35 then near $81.10 and below there near $80.75 with resistance at $82 then near $82.30.
Natural Gas:
Natural gas has pulled back a bit in the overnight trade after yesterday's big gains and it is somewhat disappointing that the market hasn't been able to make a run back to the $6.00 price level despite a variety of positives being thrown at it. So far, February natural gas hasn't been able to follow through higher despite the extended cold weather forecast that's starting to stretch into the second half of January. Most weather forecasters are predicting below normal and at times frigid temperatures in key US heating regions through January 19th. Therefore, it's a bit surprising natural gas hasn't seen more upside mileage from expectations higher winter heating demand will help trim the storage supply glut. It also doesn't seem as if the market's outlook for industrial fuel demand has improved too much despite signs that economic conditions are improving including a higher reading in yesterday's ISM manufacturing index. But on the other hand, after the last two reports on natural gas storage came in below expectations despite the cold weather, doubts remain as to whether demand for natural gas can recover enough to outpace supply, especially since gas producers could be motivated to increase production if fuel prices rise above the $6.00 breakeven threshold. The December 29th COT report with options for natural gas showed managed money funds increasing their net short position by 3,242 contracts to 27,225 contracts net short. Therefore, it may take more convincing evidence that fuel demand is starting to recovery before funds are motivated to get out of short positions and enable February natural gas to make a decisive push above the $6.00 price level. Today's reports on factory orders and pending home sales will provide more economic insight that could impact natural gas trade this session. But we suspect a much larger than expected storage decline in this week's inventory report will need to be seen in order to provide enough of a bullish catalyst to push February natural gas above last week's high. While it is certainly risky to be short natural gas given the temperature outlook, this market seems to lack the bullish momentum right now to make a push through overhead resistance. Therefore, we get the sense that February natural gas may be confined within a $5.50 to $6.00 price range ahead of this week's storage report.
Watching
Keep an eye on your 5m and 15m Crude charts. We might have a short play setup tacking shape.
Target #2 Hit
Good morning! We hit target # 2 overnight.
EX-1 sold 3rd contract @ 1128.00 for a total trade gain of $1960.
EX-2 sold 2nd contract @ 1128.00
Lets keep it going today!
EX-1 sold 3rd contract @ 1128.00 for a total trade gain of $1960.
EX-2 sold 2nd contract @ 1128.00
Lets keep it going today!
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