Bonds Flashing Sell Signals in Equities & Commodities

Written by Al Martin Sunday, 30 September 2012 23:48


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(9-30-12) We continue to trade the December Long Bond contract from the long side, as we have been doing for a number of months now. We were buyers of the contract on our standing order at 149.06 in Friday’s overnight trade, selling on our standing order at 149.14. Bonds continue to act well. Last week’s series of US Treasury Bond auctions were the best in years. Demand for US Treasury instruments continues to rise, as long rates continue to fall due to persistent fear bid of European and Asian calamity. We see no reason that this trade will be interrupted. Continue to own bonds.

The December Dollar Index broke out of the 79.30 resistance area in line with our previous week’s suggestion. It was able to establish a close above 80.00 in Friday’s session. We would expect the Dollar to work higher as the ECB has shot its load The only blemish on the Dollar horizon is the Spanish bailout, but we believe that even that will have only a temporary effect on the Dollars.

Nov. Oil continues to congest in the 91-93 area. We are consistently selling the Oil on moves to 93.00 or better, covering on dollar dips. Oil clearly looks tired. Supply/ demand fundamentals are as bearish as at any time since the Stone Ages. We think the Nov. Oil is coming back down under $90.

Dec. Gold continues to be well bid even with the rest of the boards sloppy. Gold has come down and held the test at $1750. However we are suspicious of the Gold at current levels due to the inordinate amount of weak-handed small-lot longs in the December Gold contract. We continue to sell the contract on moves just above 1780 and cover on dips down to 1768.

March Sugar – beginning to give up the ghost. We have consistently recommended short selling the contract on moves up to 20.75 or better, covering on half a dollar dips, a trade that we made three times last week. We continue to look at that trade as being a winner, as global Sugar surpluses continue to swell.

Nov. Orange Juice continues to break down in line with our previous week’s suggestion. We had shorted the contract on the turn-back from the 1.30 area. We are still holding our short position. We expect that the Juice will come down for a test of the 1.08 area, as Juice inventories continue to build and Florida Orange production looks to be at record levels.

Nov. Lumber – good short-covering action in Friday’s trade.  We were buyers on our 277.30 stop, selling at 280.50. We think this was nothing more than short-covering action and would look to be short sellers of the Lumber at 283.

Grains continue to move lower, led by Corn and Beans, despite diminishing domestic stocks of Corn and Wheat as seen in last week’s USDA report. Global inventories of Grains continue to build with all major Grain producing nations either having had or will have a record 2012 crop. We continue to look to short the Beans on moves above 16.00. We think the Dec. Wheat back above $9 is dramatically overbought.

Dec. Silver contract continues to lag relative to the Gold. We think this is a bearish sign for Gold, as odd lot speculators begin to get weeded out of the December Silver. We continue to look to short the contract on moves to 34.75 or better, as we have done throughout the week, covering on 25 cent dips.

The October Platinum – once again overbought on Friday’s 1666 close. We would look to sell this contract on any move up to 1670 or better.

December Copper – congesting around the 3.750 support area. However several attempts to take Copper below 3.70 in last week’s trade failed. We suspect that the Copper will move lower as Copper supply/demand fundamentals are now the most bearish on the planet that they have ever been.

December Coffee continues to break the 1.70 area, although it has been able to consistently recover giving up second shorting opportunities at the 1.73-1.75 zone. We continue to look ta that zone for fresh shorting opportunities.

Dec. Cocoa – good short-covering action in Friday’s session as 2500 was breached once again. We were sellers of the contract at 2540 and better, covering on a 2516 close. Cocoa is now dramatically overbought relative to underlying supply/demand fundamentals and seeing its price sustained purely due to West African and Brazilian shipping delays.

December Cotton continues to move lower in line with our last week’s prediction. We recommend selling the Cotton in the 73.50 area as we have consistently done. The trade gave up 3 cents in last week’s trade. We continue to believe that 70 cents in the Dec. Cotton will be broken.

 

Air Bleeds from Hopium Clouds

Written by Al Martin Sunday, 23 September 2012 22:16

(9-23-12) We saw the Dec. Long Bond contract pickup in line with our previous week's suggestion. We have been trading the contract on the long side since 144.16, where we originally recommended buying the contract. The contract had a good close at 147.00. We believe that 148.00 now in the offing in the coming week’s trade.

The Dec. Dollar contract – holding support at 78.80, as the Euro, which we have been short from 1.3150, continues to move lower. We would expect the Euro to break under 1.29 in the coming week’s trade.

 The Nov. Oil contract – we are now shorting on moves above 93.50 and would continue to look at the 93.50 - 94.00 zone for fresh shorting opportunities

 Dec. Gold – one of the few contracts to break out late week, being turned back at the 1790 resistance level in Friday's trade. We were short sellers at 1790 on our standing orders, covering at 1775 late session. Although Gold has backed off, we would expect the Gold to re-assault the 1790 level in the coming week’s trade.


Read more: Air Bleeds from Hopium Clouds

 

Consecutive Shots of Fed-ECB Hopium Run into Weak Seasonals

Written by Al Martin Sunday, 16 September 2012 21:26

(9-16-12)  The Dec. Long Bond contract fell sharply in Friday’s action, taken lower by institutional short-selling to offset Bond ETF withdrawals. Bonds are now sharply oversold. We were buyers of the Bonds on our standing order at 144.21 in Friday’s session. Despite ETF selling, we think the Bonds are now oversold and due for a Monday bounce back to test the 146.00 area.

Continued selling in the Sep. Dollar Index (DX Index) gratis of Sep. Euros moving above 1.3100 in Friday’s session. We are once again short the Euros from 1.3130 and would expect a pullback in Monday night’s trade.

The Oct. Oil contract was lifted by Dollar action as well as increased Middle East tensions. However upside action in Oct. Oil sloppy. We would be looking to sell the Oil again on any retest of 100.00.

Dec. Gold continues to consolidate in the 1768-76 area. The contract is having a hard time at the 1782 resistance level. We think the contract will get turned back for a retest of 1760 in early week trade.

Read more: Consecutive Shots of Fed-ECB Hopium Run into Weak Seasonals

 

Risk-On Trade Continues To Build, As Planet Drowns in Hopium Pabulum

Written by Al Martin Monday, 10 September 2012 04:40

(9-9-12)  We saw a sharp back-off in the Dec. Long Bond contracts. We will now be trading the Decs, Both Sep. and Dec contracts are now 1-3/4 in Friday's session. However with Draghi-Speak now out of the way and no fresh Fed-Speak until later this week, we think there is a window for the Bonds to recover. We will be looking to buy the Dec. Bonds on any continued fall down to 149.00 in Sunday night's trade.

 The Sep. Dollar contract was hit with the 8260 and 8160 support levels giving way. We had shorted the Sep. Euro contract on our standing orders at 1.2815 in Friday’s trade. We think the Euro is now running out of gas. The trade may be good up to 1.2850 -- but we doubt any more.

The Oct. Oil contract, although dragged higher in Friday’s session by good action in the rest of the boards, continues to be a short on rally trade. We would be looking to sell the contract on any move above 96.50 in Sunday's overnight trade.

Read more: Risk-On Trade Continues To Build, As Planet Drowns in Hopium Pabulum

 

Spoos and Bonds Continue To Tell Two Different Stories

Written by Al Martin Sunday, 02 September 2012 21:56

(9-2-12) We saw the Sep. Long Bonds have a substantial rally in Friday’s action. We had put out an emergency buy recommendation at 149.12 early Friday morning where we had bought in sixteen Bonds. We were sellers at 150.24 on the close With a strong US Bond calendar last week, supply pressure having been relieved in late Thursday trade, Bonds continue to tell a different story than do equities with incessant injections of central bank pabulum into the global Hopium clouds. We continue to trade the Bonds from the long side.

Read more: Spoos and Bonds Continue To Tell Two Different Stories

 

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