By Matthew Bradbard | February 08, 2012 | 5:50 PM | 0 Comments
Non event in the markets today but it does feel like markets are taking a breath for a big move…I am just torn on what direction. As trades develop I will try to keep you informed. Crude will close above $97 on the March contract today which puts the bulls back in control. Support is seen between $97-98 and aggressive traders can reverse their bearish trades and start scaling into long trades. RBOB is approaching $3…a level not seen since last April so expect momentum traders to lift this distillate further if we see a trade above that critical level. Heating oil was higher for the fifth straight session but failed to make a higher high. I am the minority but I’m thinking we need the distillates to come off 15-20 cents/gallon before any substantial upside. I have advised clients that trade here to hold off on purchases waiting for a break in prices. No interest in natural gas..the moves are too sporadic. It sounds like a broken record and by no means fall asleep at the wheel but I remain friendly to stocks until the 9 day MA is penetrated. How high do prices go I have no idea as they have already exceeded my expectations. June gold continues to run into resistance between $1760-1765. I think there is a risk of a $50-75 correction though I’ve been voicing that for a week to non-believers. Silver also looks ripe for a correction but I reserve the right to change my mind on consecutive settlements above $34/ounce in March which has yet to happen. OJ has closed lower 10 out of the last 12 sessions after reaching record highs nearly 3 weeks ago. The near 15% depreciation in my opinion is just the beginning of a deeper fall that could drag prices in March closer to $1.70. The 20 day MA’s are the pivot point in Treasuries so with 10-yr notes and 30-yr bonds closing back below that level I shift slightly bearish. My clients have no exposure we as we view better opportunities elsewhere. Ag was flat today anticipating tomorrow’s USDA report. I would open the opportunity to buy a break in this complex but clients have been advised to go into the report flat. Any longs should have tight stops and do not rule out a limit up/limit down open. The report comes out at 830 AM and the market is closed until 1030 AM so the position you are in at as of 730AM is the position you hold into the report. Live cattle were slightly higher while lean hogs were slightly lower. As for trade I would suggest buying a break in pigs and cows.
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By Chris Ciovacco | February 08, 2012 | 10:00 AM | 0 Comments
We will be watching our position in Germany (EWG) closely over the next few days. The chart below shows the German DAX’s performance relative to the S&P 500. Note when RSI (top) reaches levels similar to what we have seen recently (blue arrows), the DAX’s relative performance tends to weaken (center of chart). The black ADX line (bottom) shows the strength of the current trend. The ADX line is trying to roll over now, which is indicative of a weakening trend. The orange arrows highlight the current and historical ADX black rollovers that occurred near peak RSI levels.
On the DeMark chart of Germany (EWG) relative to the S&P 500 (SPY), we are nearing an exhaustion count. In recent history, similar DeMark signals were followed by a pullback in risk assets (red arrows). These signals can be a little early (late 2011 below), which means stocks and commodities may have some more upside.
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By Gary Kaltbaum | February 08, 2012 | 9:12 AM | 0 Comments
The bottom line is — the market remains in shape. There are few areas, not so good. Plenty of stocks that are not in good shape. But the things that are working, are working fine.
I just have to repeat something to you. I am a student of the past. I am a student of the Fed—not in understanding them, but in following them. Never in our lifetime have we seen such massive debt leverage and printed money out at the same time…in order to do what? You know what in 2008, there may have been a reason to go to zero percent interest rates and print money. We were losing a lot of jobs at the time and they were worrying about the financial system. Last time I looked, we had growing economy, though tepid. Employment is supposedly getting better, though not that great. But this Fed is acting like we are in a major depression. Not recession – DEPRESSION. And look no further than that on why the market’s doing whatever it’s doing. Keep in mind: The market on most averages were down last year. And most averages are still flat from January 1st 2011, notwithstanding a couple. And many foreign markets are still down.
But we’re seeing good action nevertheless right now. All selling has been picked up by buying. We’ve broadened out some. And the only thing I can say that’s bad is that we are so due to pullback at any time. Didn’t happen today.
A Couple Oils That Broke Out
A couple oils broke out of pretty long trading ranges today. Now remember what a breakout is, that simple means that the stock is trading between two points in price over a good period of time. And they either break below or above those levels. This usually indicates another move coming, starting with that move. Not all breakouts work. Sometimes go up and they fail…and make you upset. Some on the downside. Just keep that in mind. We follow these breakouts because, IF a stock’s going to go up big, that has to occur. What we’re looking for are characteristics of success here in the market, in sectors and individual stocks. All we’re looking for us leadership and ability to buck the trend.
The following is for your review. I am not telling you to do anything. I’m just letting you know what occurred today. I am your market reporter.
- First and foremost, Anadarko Petroleum (APC) on more than 2x average breaks above a one-year trading range today. That’s a very long base.
- On top of that, Plains Exploration (PXP) on almost 2x average did the same. Not as good looking as Anadarko.
9 States Target Pension Perks
In case you did not know this, in many places in the county, government officials have decided to pay those same government officials with ridiculous over the top pension funds. Which means “So I was a government official and I was making $110,000 a year. I want to retire at the age of 52. I’m going to make my pension $125,000 a year.” I’m not making this up. Seriously. It’s nice to be able write your own rules and regulations and paychecks…of course all coming from the taxpayers. That was on the front cover the USA Today. Good article.
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By Matthew Bradbard | February 07, 2012 | 4:01 PM | 0 Comments
Metals, stocks and even foreign currencies continue to build on strength as 2012 has virtually been a one way trade…will this continue? Crude oil erased the previous week’s losses adding 1.9% today but failed to close above $99 in March. I view that level as the pivot point so I remain bearish still. Be willing to cut loses on any shorts if prices trade through that level in the coming sessions. Natural gas continues to bounce around and I would suggest no long or short trades until we get a clearer picture. A fresh 2012 high with equities gaining 0.50% today. The 9 day MA continues to act as my pivot point and although we’re approaching overbought levels I learned a long time ago not to jump in front of a freight train. Positive news out of Europe with progress being made caused the Euro to jump and other crosses to follow. Clearly wherever the Euro goes other currencies will follow and at the moment that looks like higher ground. It also helped that the US dollar fell to a two month low. Gold and silver reversed early in the AM to go from negative to positive with gold and silver gaining 1.4% as of this post. Prices may try to visit the recent highs but I have not seen enough of a correction to justify further upside. I am still looking for a move under $1700/ounce in the June contract. March silver is back above $34/ounce but like gold I feel we have more of a break before any serious advance. If you notice in this complex gold, silver and copper seem to be consolidating …the debate is if the market is taking a breath for additional upside or preparing for a reversal? OJ lost nearly 3% closing below $2 for the first time in three weeks…expect further losses as the 50 day MA may come into play. That level is $1.83 in March. Continue to use the 20 day MA as your pivot point in Treasuries as 10-yr notes and 30-yr bonds closed below that level today. Traders can gain bearish exposure in 2013 Euro-dollars with stops above the recent highs. The suggested play would be to build a position on the way down while trailing stops. Ag prices appear to be stalling unable to hold onto gains across the complex. Most traders are likely waiting for Thursday’s USDA report and will make a move based on the numbers. Any longs should be trailing stops and it may be prudent to book profits and be in a cash position headed into the USDA report. April live cattle continue to wander between $1.27 and 1.29 trading higher back up near the top of that range today. I am suggesting buying a break closer to $1.25. Let lean hogs work lower as well as my target in April is a buy closer to 86 cents…trade accordingly.
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By Chris Ciovacco | February 07, 2012 | 9:14 AM | 0 Comments
Gold’s rally looks like it may be ready to take a breather, which may coincide with a period of “risk off” beginning relatively soon. Note price action after the orange arrows.
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