Spoos Fall & Bonds Rally in Line with Our Predictions

Written by Al Martin Sunday, 06 May 2012 23:44

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(5-6-12) Last week we saw the June Spoo contract come down in line with our predictions. We had sold the contract in Thursday’s overnight trade at 1402, which was reached twice on a 1402-03 spread. The contract fell back 40 handles in Friday’s aftermarket trade, with the final trade coming on the 4 o’clock bell, selling the Spoos at 1368 and covering them at 1363. We covered our short Spoos on the final bell Friday at 1363 and would be looking to sell them again on any move back to 1380.

Also in our previous week’s missive, we warned that the June Long Bond contract would rally above its previous week’s 143 high to test the 144.00 area. Indeed in Friday trade we saw the June Long Bonds trade up to 143-7/8 before settling back to a 143.23 close. Bonds still look higher.

We had also warned of overvaluation in the June Crude Oil contract, maintaining our stance that the contract would come back down for a retest of 100.00. In fact on Friday, the contract simply fell apart with fresh sell stops, including our own, at 99.99 being hit. We took a record $6 out of the June Crude Oil contract in the six trades we had in the Friday session. We think that the Crude will come down for a test of its near term low at 97.20] as early as Sunday night.

We had warned of sloppy action in the June Gold contract. We had been consistently shorting the contract on moves to 1660 or better throughout the week. The contract finished out at 1642.60. We believe this contract will come back down for a test of 1620 in the coming week’s trade.

Also we had warned of near term overvaluation in the July Sugar contract. We had been consistently shorting the contract above 21 cents in early week trade. The contract went out at 20.61 in late week action. Although the contract is holding test down to the 20.30 area, we think that the 20 cent number will be breached in the coming week’s trade, as fresh shorts pile in.

The July Orange Juice contract also came down in line with our predictions. We were sellers of the contract throughout the week. We had warned of severe overvaluation in the Orange Juice complex. Indeed we think this contract has nowhere to move but south.

July Lumber – we had recommended consistently shorting the contract on rallies to 286 or better. Indeed that was the trade of the week, with trades available three out of five sessions on $2-3 scalps. We will look at the 286 or better area for fresh shorting opportunities

Grain contracts finally backed off. We had warned of severe overvaluation above $15 in the July Beans. We were consistent sellers in size in the July Beans in moves above $15 throughout the week. The contract went out at 14.7825 in Friday’s trade, and we believe the contract will back down for a retest of 14.60 in the coming week’s trade, as much-vaunted Chinese buying still fails to appear and global bean stocks begin to look healthier.

The July Wheat – also coming down several times for tests of $6. We think it only a matter of time before $6 is breached, as global Wheat supplies continue to be rebuilt.

The July Silver contract – acting sloppy with a consistent selling pressure in the Copper. We were sellers around $31 throughout the week as we recommended in our weekly missive. We covered our shorts Friday from a 38.30 close. We think the July Silver will not be able to hold $30 much longer.

The White Metal complex led by July Platinum continued to move irregularly lower throughout the week. We had warned that the days of being able to sell the contract above 1600 were over. We think 1500 will give way in the coming week’s trade.

The July Copper contract – good selling action late week as fresh shorts come into the contract on reduced Chinese buying and increased global inventories. Do not be suckered by the shills pounding the drum that Copper stocks are down now at the LME. That is completely bogus as fresh Copper is not coming into the market due to falling demand.

We had also warned that July Coffee would be moving lower during the week. Indeed we saw the Coffee get hammered under the 1.77 area. We had sold the Coffee twice  at 1.8740 which we covered at 1.7440 in Friday’s trade. We think the Coffee still has lower to go.

Short covering action in the July Cocoa reversed earlier week declines. However we still recommend shorting the July Cocoa on moves above 2300, a trade that has been consistently profitable.

We had also warned that the July Cotton would be coming down to the bottom end of the recent range, a process which began in Friday’s trade. We are now consistently selling the contract on moves back above 89 cents. We believe that the contract will come down for a test of 86 cents in the coming week’s trade.

Will ‘Sell in May And Go Away’ Hold True Once More?

Written by Al Martin Sunday, 29 April 2012 23:37

(4-29-12) The June Long Bond contract continued to be well bid throughout the week. We continue to trade the contract from the long side on dips, as does most of the professional trade. Once again we were buyers of the contract in Friday’s intraday trade on our standing orders at 142.12, which we sold on the close at 142.20, scalping a quarter point out of the Bond contract and taking a total of 1-1/4 points out of the contract in the Thursday-Friday session. Although the contract is well bid, principally off the back of the Spanish down grade and poor results in recent Italian Bond auctions, the contract really needs to establish a close above 143.00 in the coming week’s trade in order to maintain near-term momentum.

Read more: Will ‘Sell in May And Go Away’ Hold True Once More?

Look for Early Week Back-Off in Spoos Before FOMC

Written by Al Martin Sunday, 22 April 2012 23:25

(4-22-12)  We are looking for a back-off in the June Spoo contract prior to the Wednesday afternoon FOMC pronouncements. Market participants believe that another shot of Hopium is necessary in order to solidify the “risk-on” trade.  It’s important that the Fed put QE 3 back on the table, or at the very least, an extension of Operation Twist. Otherwise Spoos will back off 20-30 handles.

The June Long Bond contract -- we continue to trade from the long side on dips, although the contract does start to look tired now above 142.16. Nevertheless we are still buying the contract on dips back to 141.26 and would continue to do so up until Tuesday’s trade.

The June Dollar index continuing to find support around the 79.30 level. Look for Dollar weakness if FOMC comes in with a shot of Hopium.

Read more: Look for Early Week Back-Off in Spoos Before FOMC

Bond Bears Beware: The Bulls Ain't Done Yet

Written by Al Martin Monday, 16 April 2012 01:22

  (4-15-12) In Friday’s trade, we saw once again a gain of a point and a quarter in the June Long Bond contract. We had been buyers the night before at 140.16 and were sellers at 141.16 on our standing orders in Friday’s trade. With the June Bonds closing the near session highs in reaction to the sell-off in the SPM contract, which gave up additional ground in the market session. We are carrying our short SPMs off of our 1369.75 sell stop. We’ll be looking to cover on a test of 1350 in the coming week’s trade.

The June Dollar Index continues to move above 80.00. We continue to expect that the 1.3050 recent lows in the June Euros will not hold and that June Dollars will be able to march up to 81.00.

May Oil -- we continue to be short sellers of the May Oil at 103.50 or better. Once again Oil marching up as global Oil supplies continue to swell and demand continues to contract. We think the Oil is at least $5 overbought at current levels.

Read more: Bond Bears Beware: The Bulls Ain't Done Yet