Supposed German Concessions Prompt Largest Short-Covering Rally in Three Years
Written by Al Martin Sunday, 01 July 2012 22:27
(7-1-12) The boards lifted sharply across the planet in Friday’s action on supposed German concessions, which are actually meaningless, leaving the boards in the most technically overbought condition since March of 2007.
Although a further continuation rally is possible in Monday’s session combined with the typical first day of the new quarter institutional buying, we are looking to short on any further extension of the rally on Monday.
We have already established light short positions on the close in the September S&P contract. We also have light short positions in the September Coffee contract, established on the close and also in the August Crude Oil contract.
In Friday’s session, the Sep. Long Bond contract came down albeit grudgingly – pounded down as bids flooded into the equity and commodity markets. However with a loss in the Sep. Long Bond contract of a point and a half, we think the Bonds acted well relative to the action in the equities and commodity complexes. We would be looking to buy the Sep. contracts on any further move down into the 147.26 area, which is where we have consistently been buying these contracts on dips over the last ten days.
Watch for Fear Bid to Re-enter Markets in Coming Week’s Trade
Written by Al Martin Monday, 25 June 2012 02:51
(6-24-12) In end of week trade, we saw the Sep. Long Bond contract come down once again to test the 147.20 area, where we have been consistently buying the Bonds. We would expect the Bonds to rally early week with failure of Euro mini-summit late week combined with no Chinese central bank action over the weekend. We would expect markets to begin falling again Sunday night.
Commodity Futures Trading; Greek Elections Roil Markets
Written by Al Martin Monday, 18 June 2012 03:38
(6-17-12) Markets responded last Friday with both Spoos and Bonds once again moving in the same direction, i.e. higher, as anticipation that the Greek pro-bailout parties would be victorious in the weekend elections began to prevail. Markets are now substantially overbought relative to the reality of the election outcomes.
Spanish Bailout Offers: Will It Be Enough?
Written by Al Martin Monday, 11 June 2012 01:20
(6-10-12) In late Friday action, we saw the Sep. Long Bonds come down, as well as a late rally in the Spoos, particularly the after-market session, on rumors of potential Spanish bank bailout offers by the ECB over the weekend. Also in the mix was over the weekend Chinese data expected to be weak, after China sent the signal Thursday morning with a surprise quarter point rate cut. Indeed the Chinese did come out with it on Saturday and it was weaker than expected. The ECB offers to Spanish banks over the weekend did not meet all of Spain’s needs. We think that the run-up in the Spoos late Friday was not justified. We sold the Spoos right on the close at 1322. Also we had bought the Bonds at 4816.
Subscribers Report Record Profits from Long Bond Positions
Written by Al Martin Sunday, 03 June 2012 23:58
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(6-3-12) We continued to trade the June Long Bond contract from the long side all of last week, as we have consistently done for the past seven weeks. We were buyers once again of the USM contract in Thursday morning trade on our standing orders at 148.09. We held the contract all the way to the end of trade Friday, selling on the 152.30 closing bid. We had warned in our previous week's missive that we suspected the Bonds would break 150 in this week’s trade. And indeed they did so in spades.
We would expect the Bonds to ease back in early week trade, as market participants feel that it's increasingly likely that Bernanke will make stronger representations about a potential QE 3 in his Thursday address.
The June Dollar contract which we had warned would break out above the 82.00 level, indeed broke out to test the 83.50 resistance area in late week trade. There is still record foreign demand for US Dollars. We expect that the Dollar will move higher and that we still expect the Euros to come down to 1.20 in the near term.
We had warned that the July Oil contract would come down further. Indeed our near term $80 target is still in sight with the contract dropping another $3.25 in Friday's trade. We had been short the contract since it came under $90 last week and are looking to cover the contract on a test of $81.
Fear bid continues to come back into the August Gold contract. Indeed we had bought the contract when it broke out of $1592 in Friday's session. We were sellers right on the close at $1625. The level of fear bid coming back into the Gold bespeaks of the global economic strains currently being experienced behind the scenes and does not augur well for the equities.
The SPM contract -- we had sold the contract again in Thursday night's trade on our standing order at 1316 which we held and covered all the way down to 1276 in Friday’s trade. The contract has now broken all support levels down. We expect ultimately that the contract will come down to test 1200 in the coming summer swoon, providing no fresh QE 3 from Bernanke and Co.
The July Sugar, as we warned, continued to move lower throughout the week. We had posted warnings that the contract would break 20 cents. Indeed after the contract broke 20 cents, it never gave you a chance to short it again back above 20 cents. The contract fell late session Friday for a test of 19 cents. We still believe the Sugar has lower to go as global surpluses continue to build.
Late week short-covering action in the July Orange Juice lifted the contract back to the 1.12 area, now trading about 9 cents off the recent lows. However we had shorted the Juice again on our standing orders at 112.30 and will be looking to take 4 cents out in the coming week's trade.
The July Lumber contract -- we have sold midweek on our standing order of 293, covering on Friday's 281.40 close The Lumber has historically been turned back on rallies above 290. We think the Lumber remains incredibly overbought at current levels.
Continued good selling action in the July Soybean contract as the 13.70 previous support area gave way. We think the Beans are still good down to 13.20.
The July Silver contract still being better supported than the Aug. Gold contract. We were buyers of the Silver on our 28.01 buy stops in Friday's trade, selling on the close at 28.50. However we also believe now that the Silver is once more overdone.
July Copper continues to hold the 3.30 level, a large support area in the Copper. We feel however that this area will give way in the coming week’s trade.
We had warned of further selling to come in the July Coffee. Indeed Coffee did break the 160 support area in Friday's trade, establishing a 157.50 close. Coffee still looks lower as global supplies continue to build.
We had suggested that the July Cocoa be continuously sold on rallies above 2100. Indeed we had sold the contract in Thursday's overnight trade on our standing order of 2108, which afforded the last opportunity of the week to sell the Cocoa. We covered the contract on our standing order at 2058. We still believe the Cocoa will come down to test 2000 in the near term.
The July Cotton, which we had recommended selling on any return back to 73.00. Indeed the cotton was turned back on the retest of 73.00. We were sellers at 72.59 covering on our standing order at 68.59 in Friday’s trade. We had warned that the Cotton had lower to go. With 70 cents now having given way in the Cotton, we think 65 cents is now in the cards.
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