Thursday, January 7, 2010
Watching Silver
I am tracking SI for a long entry. Silver seems to be bucking the choppy trend everywhere else so stay tuned we might have and entry, but stay out of the financials.
SOH
We have a couple of long setups on the YM and ES taking shape but with the NQ not confirming and the internals a complete mess we will continue to sit this session out and preserve capital. We've had a nice week so far with our first two trades both hitting 2nd target levels and I'd hate to give anything back on only half of a chance today.
Morning Volume
630k Emini contracts traded.
NYSE - 340 million vs 300 million (+13%)
NASDAQ - 691 million vs 671 million (+3%)
NYSE - 340 million vs 300 million (+13%)
NASDAQ - 691 million vs 671 million (+3%)
SOH
So far the morning sessions has been movement in both directions. Breath is flat so we are sitting out till the market can make a move and then show some follow through.
Today’s Market Guidance (From Profit Source Futures & FX Research)
Financial Overview:
The stock market is still showing some suspect activity and that is partially the result of the overbought technical condition of the market and that is also partially because the US macro economic outlook remains suspect. Recently the market has seen attempts to rekindle credit ratings concerns, anxiety over the foreclosure pace and even concerns of widespread problems in the commercial real estate sector, but yet those themes haven't been able to sustain and control the market. Certainly the sharp slide in US pending home sales early in the week, served to knock some of the speculative wind out of the market, but seeing some Fed members in favor of more large scale asset purchases in the last Fed meeting, should have given the market some confidence that the Fed is still intent on securing a recovery and that the shift toward higher rates hasn't taken place yet. On the other hand, the Chinese central bank overnight showed some rather aggressive tightening moves and that could be a force that serves to enhance the profit taking bias that seems to be in place in the early US trade today. With a series of same store sales figures to be released this morning and those figures expected to tell the tale of the holiday shopping season, the tone of the trading session might be set off something other than the initial and ongoing claims data. With the weaker early bid this morning, the market would seem to need something distinctly positive from either claims or the retail figures just to throw off a weak corrective tilt.
Dow:
With the March Mini Dow already falling below the prior session's low and up trend channel support seen today at 10,445, it would appear that the bear camp is attempting to press prices downward. However, the big cap stocks have been the weakest and most vulnerable sector of the market and therefore Dow traders might want to watch critical up trend channel support in the March S&P down at 1121.35 today for a sign that the corrective action is gaining momentum.
Momentum studies are trending higher but have entered overbought levels. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside target is at 10580. The next area of resistance is around 10552 and 10580, while 1st support hits today at 10488 and below there at 10451.
S&P:
As mentioned already, the March S&P has a somewhat critical up trend channel support zone down at 1121.35 and the failure to hold above that level could embolden the bear camp. While there are some predictions of a positive jobs number on Friday morning, it doesn't seem like many players in the market are willing to bet money on that outcome. In short, we see a typical 2 to 3 day corrective slide underway, but we don't see an end to the overall uptrend pattern. Technically, today would be the third day down in the Nasdaq and with that market really the leadership market, traders should consider the purchase of some February E-Mini calls on a slide down to 1125.20 today.
Rising stochastics at overbought levels warrant some caution for bulls. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market has a slightly positive tilt with the close over the swing pivot. The next upside objective is 1140.43. The next area of resistance is around 1137.12 and 1140.43, while 1st support hits today at 1128.88 and below there at 1123.94.
NASDAQ:
Technically the action in the March Nasdaq this morning favors the bear camp. In fact, unless the regularly scheduled economic news this morning, or the retail sales figures provide a change of pace, we have to think that many longs are going to bank profits and move to the sidelines ahead of the upcoming Non Farm payroll report. Critical close-in support in the March Nasdaq is seen at 1866.50 and a slide below that level could quicken the pace of selling and in turn increase the bearish anxiety in the marketplace.
Gold:
The bull camp in gold has to be a little discouraged by the lack of follow through yesterday in the wake of the US FOMC meeting minutes, as some Fed members were still in favor of more asset purchases. Furthermore, the bull camp is probably a little disappointed with the prospect of Chinese tightening moves that were seen overnight. It should be noted that the gold market overnight also saw a series of favorable Chinese retail gold demand predictions but into the opening today, the gold market seems to be more interested in outside market forces, than internal demand prospects. With the trade clearly taking a large measure of direction from the US Dollar, the gold trade could be facing a conundrum off the upcoming US payroll result, as a strong number increases the fears of a rate hike and that in turn could support the Dollar. In the event that the payrolls are weaker than expected, that could serve to undermine a number of physical commodities from the fear of sagging demand. Therefore, it would seem like the gold bulls need a number that is not too hot and not too cold on Friday morning. In the meantime, the gold trade will probably watch the Dollar action very closely especially in the wake of the claims data, as that data could set the tone for the coming 36 hours of trade. The 50 day moving average in February gold comes in today down at $1,121.50.
Silver:
After making a somewhat impressive fresh new high for the move again overnight, the March silver contract as of this writing had fallen back sharply from its early highs. With the March silver contract sitting as much as 30 cents an ounce below the early highs, the technical crowd is suggesting that the bulls might have exhausted themselves. However, despite the sharp setback from the early highs today, March silver still remains well above the 50 day moving average on the charts. Nonetheless a bounce in the Dollar this morning and some initial weakness in the US equity market appears to give the bear camp some classic fundamental ammunition. Like the gold market, the silver trade might be presented with a difficult 36 hours of trade ahead, as good US numbers could spark selling off further Dollar strength. It is also possible that weakness in copper and energy prices is providing some spillover pressure toward silver prices in the early going today.
Crude:
It was a bit surprising to see such a bullish reaction in crude oil yesterday given the bearish readings in this week's inventory reports so it's not too surprising to see the market pull back in the overnight trade. With daily indicators at an overbought extreme, we suspect sustaining a move above the October high will be difficult without first seeing the market correct its technical condition a bit unless a fresh bullish catalyst surfaces. But with EIA crude oil stocks rising 1.3 million barrels and supplies at the Cushing location hitting a record level certainly gives traders an incentive to take profits. In fact, with the US refinery operating rate falling below 80% and imports edging up, oil stocks levels look set to build again in the weeks ahead and that will certainly be a stumbling block for the bull camp. Also, gains in oil and other physical commodities have been based on expectations for a recovery in global demand with China taking a strong leadership role. However, news that China has started to tighten interest rates and liquidity has undermined sentiment in a variety of commodity markets overnight including energy. Part of the gain in the oil market has also been tied to the extremely cold temperatures hitting a large portion of the US this month raising the demand outlook for fuel. But with the EIA report showing distillate stocks fell by less than expected, the demand outlook may be in question. With February crude oil rallying for ten straight sessions, there would certainly seem to be the scope for a more extensive pull back in oil, especially if the Dollar can build on overnight strength. Therefore, the technical condition, bearish outside market influences, the rise in supplies and the China news are factors that give traders several good reasons to take profits and raise the odds for a more extensive break in oil to be seen this session, especially if today's news on jobless claims disappoints. While February crude oil could end up giving back a sizable portion of yesterday's gains, the uptrend in oil certainly appears to be well entrenched given the broader bullish market themes that have been propelling oil prices higher. Although traders could get an opportunity to buy crude oil closer to the $80 price level, a technical correction in crude oil could easily end up being short lived. In fact, it will be a test of the bull camp's resolve to see if active fund buying surfaces again at lower price levels which has the potential of cutting short a technical correction since that was clearly evident in yesterday's trade.
Natural Gas:
While the February natural gas would seem to have both the technical and fundamental backing to eventually make a run at the October high, a volatile two-side trade is likely to be seen before the market gets to that target. In fact, February natural gas has pulled back from overnight highs with the market at times under a bit of pressure from a slide in oil prices and a strong bounce in the dollar. The upward thrust in natural gas back above the critical $6.00 price level this week has been partly based on concerns that the cold temperatures blanketing a good portion of the US could result in wellhead freezing that disrupts production leaving fuel end users to draw down supplies from storage. Reports that natural gas flows from liquefied natural gas terminals reached a two year high this week on cold weather demand may also be helping to improve the fundamental outlook. We also suspect seeing the EIA report a 1.3 million barrel decline in heating oil stocks yesterday could be raising expectations for a large natural gas storage draw to be seen in today's report. However, despite the cold weather, the last two storage reports were disappointing and triggered sizable breaks in natural gas prices. For this week's storage report most traders are expecting a 153 bcf fall in stocks which would outpace the 60 bcf decline last year and be significantly more than the 5 year average decline of 78 bcf. But given yesterday's price action we suspect some traders may be disappointed unless a larger than expected storage decline is seen since the market also seems to be pricing in large storage drops over the next two weeks given the cold temperature forecast. However, since the forecast only has a minor moderation in temperature with conditions still fairly cold through January 20th, we suspect price pull backs in natural gas will end up being short lived as long as the cold weather sticks. On the other hand, with funds still holding a large net short position in natural gas, seeing a large drawdown in today's storage report could inspire more aggressive short covering and that could be the catalyst that lifts February natural gas back to the October high near $6.30. Support for February natural gas comes in near $5.82 and then near $5.62 and below there near $5.50 with resistance at $6.088 then $6.17 and above there at $6.30.
The stock market is still showing some suspect activity and that is partially the result of the overbought technical condition of the market and that is also partially because the US macro economic outlook remains suspect. Recently the market has seen attempts to rekindle credit ratings concerns, anxiety over the foreclosure pace and even concerns of widespread problems in the commercial real estate sector, but yet those themes haven't been able to sustain and control the market. Certainly the sharp slide in US pending home sales early in the week, served to knock some of the speculative wind out of the market, but seeing some Fed members in favor of more large scale asset purchases in the last Fed meeting, should have given the market some confidence that the Fed is still intent on securing a recovery and that the shift toward higher rates hasn't taken place yet. On the other hand, the Chinese central bank overnight showed some rather aggressive tightening moves and that could be a force that serves to enhance the profit taking bias that seems to be in place in the early US trade today. With a series of same store sales figures to be released this morning and those figures expected to tell the tale of the holiday shopping season, the tone of the trading session might be set off something other than the initial and ongoing claims data. With the weaker early bid this morning, the market would seem to need something distinctly positive from either claims or the retail figures just to throw off a weak corrective tilt.
Dow:
With the March Mini Dow already falling below the prior session's low and up trend channel support seen today at 10,445, it would appear that the bear camp is attempting to press prices downward. However, the big cap stocks have been the weakest and most vulnerable sector of the market and therefore Dow traders might want to watch critical up trend channel support in the March S&P down at 1121.35 today for a sign that the corrective action is gaining momentum.
Momentum studies are trending higher but have entered overbought levels. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside target is at 10580. The next area of resistance is around 10552 and 10580, while 1st support hits today at 10488 and below there at 10451.
S&P:
As mentioned already, the March S&P has a somewhat critical up trend channel support zone down at 1121.35 and the failure to hold above that level could embolden the bear camp. While there are some predictions of a positive jobs number on Friday morning, it doesn't seem like many players in the market are willing to bet money on that outcome. In short, we see a typical 2 to 3 day corrective slide underway, but we don't see an end to the overall uptrend pattern. Technically, today would be the third day down in the Nasdaq and with that market really the leadership market, traders should consider the purchase of some February E-Mini calls on a slide down to 1125.20 today.
Rising stochastics at overbought levels warrant some caution for bulls. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market has a slightly positive tilt with the close over the swing pivot. The next upside objective is 1140.43. The next area of resistance is around 1137.12 and 1140.43, while 1st support hits today at 1128.88 and below there at 1123.94.
NASDAQ:
Technically the action in the March Nasdaq this morning favors the bear camp. In fact, unless the regularly scheduled economic news this morning, or the retail sales figures provide a change of pace, we have to think that many longs are going to bank profits and move to the sidelines ahead of the upcoming Non Farm payroll report. Critical close-in support in the March Nasdaq is seen at 1866.50 and a slide below that level could quicken the pace of selling and in turn increase the bearish anxiety in the marketplace.
Gold:
The bull camp in gold has to be a little discouraged by the lack of follow through yesterday in the wake of the US FOMC meeting minutes, as some Fed members were still in favor of more asset purchases. Furthermore, the bull camp is probably a little disappointed with the prospect of Chinese tightening moves that were seen overnight. It should be noted that the gold market overnight also saw a series of favorable Chinese retail gold demand predictions but into the opening today, the gold market seems to be more interested in outside market forces, than internal demand prospects. With the trade clearly taking a large measure of direction from the US Dollar, the gold trade could be facing a conundrum off the upcoming US payroll result, as a strong number increases the fears of a rate hike and that in turn could support the Dollar. In the event that the payrolls are weaker than expected, that could serve to undermine a number of physical commodities from the fear of sagging demand. Therefore, it would seem like the gold bulls need a number that is not too hot and not too cold on Friday morning. In the meantime, the gold trade will probably watch the Dollar action very closely especially in the wake of the claims data, as that data could set the tone for the coming 36 hours of trade. The 50 day moving average in February gold comes in today down at $1,121.50.
Silver:
After making a somewhat impressive fresh new high for the move again overnight, the March silver contract as of this writing had fallen back sharply from its early highs. With the March silver contract sitting as much as 30 cents an ounce below the early highs, the technical crowd is suggesting that the bulls might have exhausted themselves. However, despite the sharp setback from the early highs today, March silver still remains well above the 50 day moving average on the charts. Nonetheless a bounce in the Dollar this morning and some initial weakness in the US equity market appears to give the bear camp some classic fundamental ammunition. Like the gold market, the silver trade might be presented with a difficult 36 hours of trade ahead, as good US numbers could spark selling off further Dollar strength. It is also possible that weakness in copper and energy prices is providing some spillover pressure toward silver prices in the early going today.
Crude:
It was a bit surprising to see such a bullish reaction in crude oil yesterday given the bearish readings in this week's inventory reports so it's not too surprising to see the market pull back in the overnight trade. With daily indicators at an overbought extreme, we suspect sustaining a move above the October high will be difficult without first seeing the market correct its technical condition a bit unless a fresh bullish catalyst surfaces. But with EIA crude oil stocks rising 1.3 million barrels and supplies at the Cushing location hitting a record level certainly gives traders an incentive to take profits. In fact, with the US refinery operating rate falling below 80% and imports edging up, oil stocks levels look set to build again in the weeks ahead and that will certainly be a stumbling block for the bull camp. Also, gains in oil and other physical commodities have been based on expectations for a recovery in global demand with China taking a strong leadership role. However, news that China has started to tighten interest rates and liquidity has undermined sentiment in a variety of commodity markets overnight including energy. Part of the gain in the oil market has also been tied to the extremely cold temperatures hitting a large portion of the US this month raising the demand outlook for fuel. But with the EIA report showing distillate stocks fell by less than expected, the demand outlook may be in question. With February crude oil rallying for ten straight sessions, there would certainly seem to be the scope for a more extensive pull back in oil, especially if the Dollar can build on overnight strength. Therefore, the technical condition, bearish outside market influences, the rise in supplies and the China news are factors that give traders several good reasons to take profits and raise the odds for a more extensive break in oil to be seen this session, especially if today's news on jobless claims disappoints. While February crude oil could end up giving back a sizable portion of yesterday's gains, the uptrend in oil certainly appears to be well entrenched given the broader bullish market themes that have been propelling oil prices higher. Although traders could get an opportunity to buy crude oil closer to the $80 price level, a technical correction in crude oil could easily end up being short lived. In fact, it will be a test of the bull camp's resolve to see if active fund buying surfaces again at lower price levels which has the potential of cutting short a technical correction since that was clearly evident in yesterday's trade.
Natural Gas:
While the February natural gas would seem to have both the technical and fundamental backing to eventually make a run at the October high, a volatile two-side trade is likely to be seen before the market gets to that target. In fact, February natural gas has pulled back from overnight highs with the market at times under a bit of pressure from a slide in oil prices and a strong bounce in the dollar. The upward thrust in natural gas back above the critical $6.00 price level this week has been partly based on concerns that the cold temperatures blanketing a good portion of the US could result in wellhead freezing that disrupts production leaving fuel end users to draw down supplies from storage. Reports that natural gas flows from liquefied natural gas terminals reached a two year high this week on cold weather demand may also be helping to improve the fundamental outlook. We also suspect seeing the EIA report a 1.3 million barrel decline in heating oil stocks yesterday could be raising expectations for a large natural gas storage draw to be seen in today's report. However, despite the cold weather, the last two storage reports were disappointing and triggered sizable breaks in natural gas prices. For this week's storage report most traders are expecting a 153 bcf fall in stocks which would outpace the 60 bcf decline last year and be significantly more than the 5 year average decline of 78 bcf. But given yesterday's price action we suspect some traders may be disappointed unless a larger than expected storage decline is seen since the market also seems to be pricing in large storage drops over the next two weeks given the cold temperature forecast. However, since the forecast only has a minor moderation in temperature with conditions still fairly cold through January 20th, we suspect price pull backs in natural gas will end up being short lived as long as the cold weather sticks. On the other hand, with funds still holding a large net short position in natural gas, seeing a large drawdown in today's storage report could inspire more aggressive short covering and that could be the catalyst that lifts February natural gas back to the October high near $6.30. Support for February natural gas comes in near $5.82 and then near $5.62 and below there near $5.50 with resistance at $6.088 then $6.17 and above there at $6.30.
Stopped Out
Good morning. Our QG trade got stopped out early this morning. Looks like nat gas has got real volitile in the last few hours. And with the storage report at 9:30cst we won't be looking for another play till everything settles back down. So we were out of the final piece @ 5.985. Over all it was a nice little winner. Lets see if we can grab another one today. The trade tracker has been updated.
P&L Totals
EX-1 = $2,305.50
EX-2 = $1,673.00
P&L Totals
EX-1 = $2,305.50
EX-2 = $1,673.00
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