Late Week ‘Whiff’ of Deflation Roils Markets
Written by Al Martin Sunday, 14 April 2013 20:50
(4-14-13) We had put out a buy recommendation in the June Long Bond contract at 146.04 in Thursday's overnight trade where we were long 16 lots. We saw the Bonds move higher on Friday as deflationary fears began to roil global markets. Once again Bonds trading up to their 147.20 recent resistance area. We were sellers of the Bonds at 147.16. We shorted at 147.19 on our standing orders and are looking to cover Sunday night on a pullback to 147.11 to take a quarter out of the trade. Although the Bonds are extended, the Bonds traded well all of last week. With last week’s US Treasury supply now out of the way, we would look to buy the market on dips. June Dollar contract continued to back off from recent highs. However we suspect the 82.00 area will act as support and we would look for a turn higher off a test of that level, as we continue to believe that the Euros can not remain above 1.30 for very long.
The May Crude Oil contract fell sharply in Friday’s trade on deflationary fears as well as rising global inventories and declining demand. We were short the contract from 94.53 covering on the close. We think that the contract will come down for a clean test of $90 but will likely hold for now.
The June Gold contract got hammered in Friday’s session. We
were short from Friday morning at 1562. We covered on our standing orders at
1495. Gold fell a further $20. Indeed we got long the Gold on our standing
orders at 1475. We think the move in the Gold was overdone and would look for a
bounce back to retest the 1505 level.
Long Bond Trade Continues to Generate Profit
Written by Al Martin Sunday, 07 April 2013 21:21
(4-7-13) As our readers know, we have been trading the Long Bonds futures from the long side on dips all of this year. Again in Thursday night trade, we put out our recommendation to buy the Bonds at 146.04, where we had bought 10 lots in. We had sold the Bonds on the following day at 147.24, after we were correct in surmising that the monthly unemployment report would be weaker than forecast. We now feel, however, that Bonds are overdone at current levels. Indeed we had sold the Bonds short at 147.28 in light session trade on Friday and will be looking for a dip down to the 147.16 area on Sunday niht.
The June Dollar contract fell back, as Euros rallied off of our weak data. We think however that the rally in the Euro is overdone and was directly related to our data. We would be looking to get short the June Euro contract again in Sunday night trade.
The May Oil continued to trade weak in Friday's session. Our
93.99 sell stops were hit, allowing us to take more than a dollar out of the
contract. We still think the Oil is coming down for a test of 90.00.
Last Week’s Rallies in Equities Set Up for This Week’s Short Sales
Written by Al Martin Sunday, 31 March 2013 21:00
(3-31-13) We saw late week buying coming into the June Long Bond contract, as once again global conservatives over Cyprus, China and a variety of fresh Euro-concerns increased interest in the safety trade. Generally poor European and Asian data also increased interest in Treasuries. We would expect the June Long Bond contract will rally up once again to test the 145.00 level early week. We continue to trade them from the long side on dips.
Cyprus Begins To Affect Markets in Late Week Trade
Written by Al Martin Monday, 25 March 2013 18:07
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COMMODITY FUTURE TRADING RECOMMENDATIONS
(3-25-13) We saw good volatility in Friday’s action in the June Long Bond contract, wherein our standing contingent order to sell the Bonds at 143.20, covering at 143.12 was filled three times. Bonds continued to vacillate in Friday’s action. Depending on the play out of the Cypriot situation in Monday’s trade, we think the action in the Bonds is going to be as much as plus one point if no Cypriot deal can be reached or as much as minus one point if a Cypriot deal is reached and the fear bid comes out of the US Treasury market.
The June Dollar index continued to consolidate around the 83.00 level in Friday’s trade, when good short covering came into both the Euro and the Pound, pushed up on a so-called “good Cypriot outcome.” We shorted the Euros late as well as the Pounds and think that the withdrawal of the fear bid in both markets is overdone, particularly considering the Fitch downgrade of UK debt in late Friday action.
April Gold contract fell back in line with our expectation as fear bids came out of the market late Friday. We were short the Gold from our overnight positions at 1615 and were able to cover on our standing orders at 1607 in late trade. Again look for a plus or minus $10move in the Gold Monday depending on Cypriot play out.
May Sugar contract continued to fall back in late week trade. We were sellers once again on rallies above 18.30. Although the Sugar continues to hold the 18.00 level, we continue to believe the Sugar has nowhere to go but south.
May Orange Juice contract – we continue to short on our standing order at 1.3950, covering on 1-3 cent dips throughout the week. We will continue to look at the 1.40 level for fresh shorting opportunities.
May Lumber continues to fall back in line with our expectation. We had shorted the Lumber at 403 in last week’s trade on our standing order and had recommended that readers do the same. Our 383 cover orders were hit in Friday’s trade. We think that Lumber also has had its play for now.
Selling action again early week in the May Bean contract. Despite bullish shillism about Chinese buying, we continue to short the Beans on rallies. Again we had sold the Beans just above 14.50 in Thursday night action, wherein we were able to take 10 cents out of them in the day session. We continue to believe that the Beans will come back down to retest the $14 area.
The Corn and Wheat also remain overbought at current levels. We have been consistently shorting the Corn in the 7.30 or better level, covering on 5-10 cent dips and would continue to look at anything above 7.30 as a short selling opportunity in the May Corn. We also look at the levels above 7.35 as a shorting opportunity in the May Wheat.
May Silver – after having played catch-up with the Gold midweek came back down to begin to trade underneath the Gold in the Gold/ Silver equator. Silver continues to act weak. We continue to short the Silver on our standing orders at 29.12 and have shorted the contract as much as 29.20 in Friday’s trade, allowing us to take a 50 cent profit out of the contract by the close. We continue to look at the 29.12/ 20 area as the shorting zone.
April Platinum – we continue to short the Platinum on moves above 1600, as we did throughout the week, covering on $10-15 dips. We continue to believe Platinum is the short in the 1600/10 area.
Good short covering action in the Copper as Copper failed to move decisively under 3.40 midweek. We believe however that the short covering bounce in the Copper is now overdone with global Copper news becoming as bearish as it has been in 20 years. We think the Copper will come down for a retest of the 3.40 area.
May Coffee – we were consistently shorting the Coffee throughout the week. Late week bounce off the 1.3250 area was strictly short covering-led. We would be looking to sell the Coffee again on any move back above 1.36.
May Cocoa – we were consistently hit throughout the week on our standing short order at 2180, which we have been covering on $20 dips.
May Cotton – we had warned of overvaluation in the May Cotton contract. Indeed we saw the Cotton fall back some 6 cents week over week. We think the Cotton has more to go on the downside.
Waiting for Pattern Completions
Written by Al Martin Sunday, 17 March 2013 23:52
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OF MARKET TRADING RECOMMENDATIONS.
(3-17-13) The June Long Bond contract continued to move higher in Friday's trade, continuing to disassociate from equity markets. After three good US Treasury auctions last week, we would expect the Bonds to move up to the 143 area in early week trade.
March Dollar contract continues to meet resistance at 83.00 However we think any moves in the Euros back to 1.31 or better are shorting opportunities, as we expect the 1.29 area to be tested within the next five days.
April Oil also being turned back consistently in the 93.50-80 area. We shorted the Oil again on our standing order at 93.75 in Friday’s trade and would expect to be able to take a dollar out of the contract by the close Monday.
April Gold contract continues to be turned back at the 1593 resistance area. We think moves above that area are shorting opportunities.
May Sugar contract -- after having a short covering run in mid-session Friday touching buy stops above 19.01 settled back. We continue to believe that the Sugar is dramatically overbought above 18.75.
May Orange Juice -- we had shorted early week on our standing orders at 1.3905, taking 2-1/2 cents out of the contract. We were short sellers again at 1.3925 in Friday’s action. We would expect that the Juice will fall back again to the mid-1.30’s area.
May Lumber which we had shorted on our standing orders at 408. We were filled on our cover orders at 403 in Friday’s trade. We think the Lumber is also dramatically overbought at current levels.
Beans continue to fall back in late week trade. We had warned that a breaking of the 14.60 support area would likely lead to a sharp pullback. Indeed we saw that in Thursday- Friday trade, our 15.5975 sell stops touched off early Friday. We were able to take 30 cents out of the contract on the close. We suspect that the Beans are coming down for a retest of the 14.00 area.
Also we were consistent short sellers of the May Wheat contract in the 7.25 area, covering on small scalps. We think the Wheat is now overdone at current levels and should be shorted on any moves back to 7.25 or better.
We also believe the May Corn should also be shorted on any move above 7.17.
The May Silver continues to act lethargic relative to the action in the Gold. We were consistently selling the contract once again on moves above 29.00 throughout the week, covering on 25 cent dips. We think moves above the 29.00-29.20 area are still shortable.
April Platinum – we were consistent sellers throughout the week on our standing orders at 1604, covering on $10-15 dips. We continue to like selling the Platinum in the 1600-1610 area.
May Copper – once again we were short sellers throughout the week in the 3.55 range, covering on 2-3 cent dips. We think the Copper is now pulling back and will come down for a test of its early week lows in the 3.47 area in the coming week’s trade.
May Coffee – we had noted that we had warned that the Coffee contract would pull back under the 1.40 area. Indeed we saw this in late week action. We think the May Coffee contract will now come down to establish a contract low in the coming week’s trade.
We had also warned of overvaluation in the May Cocoa contract. Indeed the contract came down throughout the week. We were short sellers on our standing orders midweek at 21.70, covering on Friday’s close at 21.15. We still believe the Cocoa is $100 overbought at current levels.
Short squeeze action continues in the May Cotton contract, as the contract soars above cash bids. We think this speculative fervor in the May contract is sharply overdone and would look to be sellers at current levels.
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