Record Sell-Off in US Treasuries Creates Buying Opportunity, as Equities Near a New Top
Written by Al Martin Sunday, 10 March 2013 21:53
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(3-10-13) The June Long Bonds came down again in Friday’s trade. We were automatic buyers at 140.18 in early Friday morning trade, which represented a 4-1/2 point decline off of the five day - intraday highs. Noting that such a decline only occurs on average of once every two years, we had sold the Bonds late, as they rallied on fresh short-covering at 141.04, taking a half a point out of the contract. We think the Bonds have reached a near-term low and should be bought again on Sunday night on any fall back under 141.00.
March Dollar Index continues to meet resistance in the 82.70 - 80 area. Next up resistance at 83.30 – 40. We still suspect -- as we were proved right last week – that the Euro wants to hold 1.30. We think the Euro should be sold on any move above 1.3130 and should be covered on dips down to the 1.30 area.
The April Crude Oil, although picking up in Thursday-Friday trade, nonetheless unable to get back above 92.00. We were sellers on the close Friday after having been long the contract on our 91.01 buy stops. We sold the contract at 91.88 in late Friday trade and would expect a retest of 91.00 in Monday’s day session.
The April Gold continued with a ten day range, representing consistent superb shorting opportunities on rallies up to the 1582-84 level. We have now sold the contract nineteen times at that level within the last ten sessions, covering on $5-10 dips. Friday’s retest of the 1560 support area presented a buying opportunity, as we believe the Gold wants to hold the 1560 area for now.
The May Sugar contract picked up Thursday-Friday on fresh Chinese interest and short covering. We suspect there are too many that were short the May Sugar in the 18.20-30 area, looking to cover down at 17.70. No shorts were flushed in Thursday and Friday trade. However we think the supposed Chinese interest into a market with a 7 million ton surplus is meaningless and Sugar should be reshorted, as we did in Friday’s session at 18.83 or better.
May Orange Juice picked up sharply in Friday’s session, touching nearly limit bid. Again large-scale short covering in the May Juice contract from shorts that were in under 1.25, expecting a break at 1.20 in the near term. We think this move was largely short covering generated. Although our 130.10 buy stops were hit in Friday’s trade, which we sold MOC, we would nonetheless be looking to sell the current level.
May Lumber also picked up in late week trade. Our next up order in the May Lumber in Friday’s trade selling at 401.60, covering at 397.60 was done. We think the Lumber should be shorted on any move back above $400, as Lumber is now approaching record levels with falling demand.
Grains – some short covering seen, particularly in the Corn and Wheat in Friday’s trade. We had warned that the Corn and Wheat would come down for a test of $7 respectively. We saw good breaks midweek underneath the $7 level in each with our 6.9975 sell stops triggered in Thursday’s trade in each contract, allowing us to take 10 & 15 cents out of the contracts respectively. We think that these contract are just coming back for a test of the $7 area before resuming their decline. We particularly believe that the Wheat should be sold again on any move back above 7.00.
May Beans – supplies continuing to improve globally. Chinese demand preventing the May contract from falling back under 14.60.We have been consistently shorting this contract on our standing order at 14.80 and covering at 14.65, a trade we have made five times in the last ten trading sessions. We continue to think that the May Beans should be shorted on moves to 14.80 or better.
May Silver continues to be turned back in the same range as has the Gold. We are consistently selling the Silver on our 29.12 standing sell orders, covering on dips down to 28.72, Silver also stuck in the range. Keep trading the ranges until they tell you otherwise.
April Platinum picked up in late week trade again back above 1600. We have been consistently selling the contract on moves to 1606-10, covering on $10-15 dips. We think the Platinum should continue to be sold in the current range.
May Copper continues sloppy action. We were sellers throughout the week between 3.52 – 3.5350, covering on 2 – 3 cent dips. We think that any moves above 3.52 continue to be shortable, given record global surpluses in Copper which continue to build.
Friday short covering in the May Coffee contract as the Coffee held the 1.41 area. We were sellers once again on our standing orders at 1.4420. We think the Coffee should be sold on any move above 1.44 and covered on 2 cent dips.
Good short covering action also seen in Friday’s trade in the May Cocoa. We think the move is substantially overdone with no fresh news in global Cocoa inventories building. We think the Cocoa at current levels is a prime shorting opportunity.
May Cotton contract – we continue to be sellers on our standing orders at 87.50, covering on penny dips. We like the 87.50 area and we think this represents a near term top, as global Cotton inventories are also now in surplus.
Rolling Tops Continue To Be Formed in Equities & Commodities
Written by Al Martin Sunday, 03 March 2013 21:57
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(3-3-13) We continue to trade the March Long Bonds from the long side on dips. We were consistent buyers of the Bonds late week on dips down to the 145.16 area, selling at 145.28 or better. We finally saw a close Friday above 146, as we had promised you in our last week's missive. We believe that 146.04 reaches this level will now give way in Monday's trade and we will look to trade up to the 146.16 area. Traders should be watching the 30-year yields. Any move
March Dollar Index continues to move higher in line with our previous week's missive. With the 81.70- 80 resistance area now surmounted, the Dollar Index now turning up to the 82.30- 40 next up resistance zone. We believe this current area could be a temporary top in the Dollars, as we continue to believe that the Euro will hold 1.30 as it did in all of last week’s trade. However if the Euro can break under the 1.29 area, we would look for further breaks.
April Crude Oil continued to break in line with our previous week's suggestion with the 92.00 level now having been given up, we expect the Oil will come down this week for a hard test of 90.00, where we expect the first test to be held.
The April Gold contract mounted intermittent rallies throughout the week after its test of 1562. We were consistently shorting the Gold above 1580, covering on $5-7 dips. We will continue to look to short the Gold in the coming week's trade, as we believe the 1562 level will not hold and that the Gold will come down for a retest of its annual low.
Sugar continues to be a license to print money and we continue to short the contract on moves in the 18.30 – 40 area, covering on dips down into the 17.95 area. The Unwashed consistently bought the Sugar in the early session, only to give it up late off their 18.00 sell stops, which we have been using to cover our shorts. Supply/ demand fundamentals in Sugar continue to worsen. We look to continue to short the Sugar on moves up to 18.30 or better.
We had warned that the May Orange Juice contract would begin to give ground in this week's session. We were short Friday from Thursday's close at 1.2780. We covered on Friday’s close at 1.2095. Juice had a sharp 7 cent drop in Friday's trade. We think the juice has further to go on the downside.
May Lumber contract -- we had shorted down to the 375 level, two consecutive limit bid days Thursday and Friday. We'd be looking to resell the May Lumber on our standing order at 399.
Grains – finally beginning to pull back. Beans, after their spike above $15 early week, wherein we were sellers at 15.10. We held the position all week, covering in Friday's session on our standing order at 14.43. We think the Beans are coming back down to reality and that the May Beans will come down for a retest to the 14.00 area. We think that strength in the Corn and Wheat is nothing more than short covering and rollover pressure from the expiring March contracts. We would look to sell the May Wheat again on our standing orders at 7.23. We are looking to sell the May Corn on any move up to 7.14.
The May Silver contract continues to trade weaker than the Gold. We were looking to sell the contract on moves up to 28.80 or better as we have been consistently doing, covering on 20 cent dips.
April Platinum – falling back further in line with our last week's missive. With the Platinum being unable to hold 1600, we had suggested 1599.90 sell stops from our last week's recommendation. Ours was hit in Thursday trade which we covered at 1573 on Friday's close, taking $26 out of the contract. We believe Platinum still has lower to go.
We had also warned of a crack coming in the May Copper contract. Indeed we saw the Copper contract trade below 3.50 in Thursday overnight trade. We believe that any move back to 3.53 is a shortable trade.
May Coffee – we continue to short on our standing order at 1.4420, which was filled four times last week, taking a penny out of the contract on each occasion. Although the May Coffee continues to want to hold the 1.43 area, we think that this hold is temporary in that we do not believe a diminishment in Vietnamese Coffee crop to be a near term game changer vis-a-vis supply/ demand fundamentals.
We had warned that the May Cocoa would break the 2100 support area. Indeed in Friday’s trade, we were sellers at 2103, covering MOC (Market On Close) at 2083. Watch in early week trade any retracement back above 2100 should be shorted again.
Late week short covering in the May Cotton contract -- we think is now done. The contract shows resistance at the 85.50 – 86.00 level. We sold the contract twice in that area late week, covering on penny dips. We think the short covering rally in the Cotton is now done.
US Treasury Long Bonds Continue To Climb; Gold Declines in Line With Our Predictions
Written by Al Martin Monday, 25 February 2013 18:55
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(2-25-13) We have been warning traders to continue to trade the March Long Bonds from the long side on dips, as we have been doing now since the first of the year. Indeed we were buyers of the Long Bonds once again in Thursday's trade on our standing orders at 143.20, which we sold on Friday’s close at 144.00. We are watching the 144.16 level in the March Long Bonds and that a close above 144-1/2 would prompt fresh short covering from institutional short sellers.
The March Dollar Index continues to move higher, although it is now meeting resistance at the next up -- meaning 81.70/ 80 resistance level. We think this resistance will be held for now, as we think that Euros are not coming below 1.3100 anytime soon. We continue to short the March Euros on moves back above 1.33.
March Oil – we had been warning of a crack in the March Oil, being the single most overbought industrial mineral on the boards. We were short the Oil from Thursday, when the Oil came under 96.00 and rode it all the way down for the test of 93.20 in late Friday’s lows. We believe that the back of the Oil market has been broken and that it will come down to its supply/ demand reality and that 90.00 is now in the cards.
The April Gold contract came down for a test of 1562, as we had warned in our last week’s missive. Indeed the last low in the Gold had been reached at the very same level. We anticipated a small bounce and covered our shorts at 1563 and got long. We were sellers of our long April contracts in the 1582 area in Friday's trade, and would look to establish shorts again at 1592 level
The May Sugar continues to be topped on moves back to 18.20 or better. We are now consistently selling the contract on moves to 18.20/ 30 covering on 30-40 point dips. Despite recent shilling in the Sugar, we think that the Sugar has lower to go.
The May Orange Juice contract -- turning back once again from the 1.30 area, as recent freeze damage in north Florida crop was less than expected. We continue to think that the Juice is overbought by at least 10 cents at current levels.
March Lumber – we had suggested to sell short again on moves above 393 to be sellers again on moves above 393. In fact we were sellers at 396 early week. Lumber having fallen back after being turned back from a test of the 400 level. Lumber remains dramatically overbought at current prices.
Grains – finally a turn-back in the Beans. We had been shorting the beans in size in a Sunday overnight move above $15 with an average short of 15.10 coming into the morning session. We covered on the close at 14.62. We think that the back of the Beans has now been broken. Unwashed longs were stopped out in Friday’s trade and we think the Beans will come back down for a test of 14.20 within the next five sessions.
The March Silver contract – also continuing to act sloppy. We were short sellers again on moves to 28.80 and higher, covering on 10-20 cent dips. We think that the March Silver is coming down for a test of 28.00.
Also we had warned of overvaluation in the April Platinum contract. Indeed the Platinum fell horrendously in late week trade. We were short the Platinum from 1670 and rode our shorts all the way down to Friday’s 1608 close before covering. With Platinum production in South Africa and Russia now increasing and global demand falling, we think Platinum has nowhere to go but south and would look to establish fresh shorts on any move back to 1630.
We had warned of a coming crack in the May Copper contract. Indeed we saw that crack late week. Our 3.5995 sell stops were hit in Thursday’s trade, which we did not cover until our 3.5180 cover orders were hit in Friday’s pullback. We think that the Copper will not hold the 3.50 level.
The May Coffee contract - we were short again in Friday’s session and are now short from 1.4360, looking for a 5 cent decline. Coffee is now regularly trading down to the 1.37 area. We suspect Coffee prices have lower to go with Arabica prices now falling underneath Robusta prices for the first time ever, bespeaking of a growing global Coffee glut.
May Cocoa – we had also warned that the May Cocoa should be shorted again on any moves above 2150. We continue to look at the 2150 fresh shorting opportunities to take $50 out of the contract.
May Cotton continues to be turned back on moves above 84.00. Recent bullishness in the Cotton, we think, is overdone with global supplies continuing to build. We are short sellers of the May Cotton on moves above 84.00.
We also believe that the Corn and Wheat have lower to go. We were short the Wheat midweek from 756 in the March contract finally covering in Friday’s 718 close. We think that with global supplies of Wheat building once again, Wheat will come down for a test of $7. We also feel that the March Corn will come down for a test of the 6.75 area.
SPX Forming Top at 1520; March Long Bonds Forming Base at 143
Written by Al Martin Monday, 18 February 2013 00:24
(2-17-13) Throughout the week we continued to sell the March spoos on our standing order at 1519.75, which has thus far been filled three times within the last five sessions. We have taken an average of 5 handles out of the contract each time. We will continue to short this 1520 area and will begin next week to build a short position there, looking for a retest of the 1490 area.
Strengthening US Treasury Bonds Spell Trouble for Equities
Written by Al Martin Sunday, 10 February 2013 23:57
(2-10-13) We continue to trade the March Long Bonds from the long side on dips. Once again we were buyers of the Bonds on the mid-day dip in Friday’s session on our standing orders at 143.05. We were sellers again on the close at 143.23, taking just over half a point out of the contract. The Treasury Long Bonds despite the proselytizing of the “Bond Bears” would demonstrate that there is a growing short interest in long-dated Treasury paper that we suspect is going to be flushed out. We continue to look at the Bonds from a trade on the long side.
The March Dollar contract – up against resistance at 80.30/ 40 level We think this resistance will be held for now as we don’t feel the Euros are ready to come under 1.3350 yet, however likely ECB and German government action is coming to force the Euros lower which will make this contract a buy again for a 50 point scalp.
March Oil – we continue to short the Oil on moves above 96.00 as we did throughout the week taking 25-50 cent scalps. Oil is still dramatically overbought at current levels. We continue to look at the 96.00 – 96.50 area for fresh shorting opportunities.
The April Gold contract continues to meet selling on runs up
to 1680.We have been consistently shorting the Gold on runs up to 1676
throughout the week, taking $5-8 profits on the short side. Gold looks tired at
current levels. We will continue to sell Gold as long as 1682 is not achieved
on a closing basis.
- Fresh Highs in Overbought Markets Create New Opportunities
- Friday's Selloff in Long Bonds Creates Buying Opportunity
- Good Bounce Off of Thursday’s Lows in March Long Bond Contract Leads to Long Trade as Speculative Blow Off in Equities Continues to Build
- Continue to Short "Risk-On Trade" Generated Rallies
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