Gold Benefits from the 'Return to Risk Trade'

Written by Al Martin Monday, 30 January 2012 01:09

alt(1-29-12) Pursuant to our predictions in our previous week’s summary, the SPHs were turned back at the 1330 level due to the substantial amount of standing sell orders at 1330. We were short sellers earlier in the week at the 1328 and 29 levels in Fridays’ session. The rally attempt failed. Nonetheless mutual funds got the kind of closes they wanted in the S&Ps. We suspect that the S&Ps can work lower in the month of February. We would expect 1290 to be the next downside target.

Read more: Gold Benefits from the 'Return to Risk Trade'


Market-Moving News Flows in the Coming Week’s Trade

Written by Al Martin Monday, 23 January 2012 20:56



(1-23-12) First we will be looking for any resolution of the current round of Greek debt crisis talks. Of course, the S&Ps mounted and were able to maintain a small rally last Friday. Bonds got hit again on rumors that there was a potential deal that was going to come over the weekend. So far that has not come. The Greek deadline is next Thursday (Jan. 26) for a debt deal.

Otherwise Greece will go into an uncontrollable default.

Also we’ll be looking Wednesday for the Fed FOMC statement. Traders will be looking for any hints of QE3.

“Will they or won’t they?” is the watchword of the day.

Traders are expecting some sort of stronger statement on QE3. If that’s what we get, that is already baked into the cake – as they say.

However, if the Fed backs down or makes no mention of potential QE3, look for a negative reaction in the equities and a positive reaction in the bonds.

The equities throughout the month of January have behaved like they did in January in 2010, a year ago.

We would expect the S&Ps to start to come under pressure next week. Indeed we sold away the SPHs at 1311 in Friday’s trade.

We also bought the bonds right on the close at 141.27. Bonds are cheap. Look at the coming week short cycle auction with $99 billion in fresh 2, 5, 7 year paper. We expect the short-dated cycle auction to continue to be well-bid.

We would like to mention that the Euros as we expected were turned back on the rally effort to 130. We continue to look to sell the Euros at 129.80 or better. If the Euros are able to crack above 130, there are substantial standing sell orders between 130 and 130.50, from professional short position traders,. looking to get on a longer term short trade above 130. However we would expect that ultimately the Euros will trade down to 125.80.

The Feb. Gold did make a little break out above the 1665 area, where we had been consistent short-sellers which was consistently a money trade. We would, however, be suspicious of the breakout, and if we can’t get above 1670, we would look to be short sellers again.

Dynamic rally in the March Silver in Friday’s session with both COMEX and CME lowering margin.

Already LME and HKME have lowered margins in Silver 30.81 buy stops were hit. We took $1.35 out of the trade. However this is simply a reaction trade to reduce margins and it sets up a short trade Sunday night.

We had been warning of the overvaluation in the March Copper. Indeed we were short sellers of the Copper, for all we were worth, on the move up to 3.81 in late Thursday morning session trade. Indeed the Copper broke with the LME, also having approached within a $100 of its 5-year high. We had warned that the contract was severely overbought. The contract acted poorly in Friday’s session, and we suspect the contract still has weak-handed longs to be flushed out.

The March Coffee continued to have wild action. However we continue to look to short the contract on any moves back to 2.2740, as we think the days for the Coffee above 2.30 are coming to an end.

The March Cocoa, which gave us a shot once again to short above 2300. Our 2299 sell stops were hit in Friday’s trade, and we were able to take $40 out of the contract. We think the March Cocoa is back in line.

Short positions have now been reduced. We think we can short this contract again.

March Cotton continues to hold in this 97-98 cent area. This hold here has been stubborn, despite increasing supply of Cotton in the cash market. We still believe Cotton will work lower.

The March Lumber  -- we were sellers again at the 243.60 area. We like selling the Lumber in the 243 or better area.

March Orange Juice: Limit bid in Friday’s session as shorts scrambled when the contracts moved above $2. Indeed we had a 2.0005 buy stop and sold our 5-lot position on the close, taking 10-1/4 cents.

However this was simply a short covering rally. Juice supply/ demand fundamentals remain bearish.

March Sugar contract has brought in fresh Unwashed  one and two lot longs -- who smell a colored light “trend? 

However with the Oil backing down now and Sugar supplies ample, we can not believe prices can be sustained at current levels, and we shorted the contract at 24.88 on the close Friday, looking for a test of 24 cents.

March Crude Oil contract also now moving lower, as Middle Eastern tensions ease. Watch for the 98.00 level to be breached. The contract can move substantially lower.

In the March Bean contract, we were short sellers in Thursday’s night session as the contract moved above $12, bringing in CLIP buy stops up to 12.03, which were soon reversed.

We shorted the contract at 12.02, covering the contract at our standing order of 11.87 in Friday’s trade. We have warned that any move back to $12 in the beams would be a short selling opportunity and continue to look at that $12 level for fresh shorting opportunities.

For those subscribers who ask why aren’t we doing S&P futures, it’s because this is a financial contract and it’s not a commodity, so it’s not in the purview of these market recommendations.

What Insider intelligence provides which nobody else does is the Grains and the Softs and Trops. The problem is that this is of limited value, since typically only professional traders trade Grains and Trops.





Taking a Profit on the Wild Ride in Orange Juice and Coffee

Written by Al Martin Monday, 16 January 2012 05:09

alt(1-15-12) Once again we saw a good rally in the March Long Bond contract after post- auction indigestion was relieved. We had predicted that the March Long Bonds would trade up to 1.45 in Friday’s session. We expect the Bonds to move higher in the coming week’s trade.

Read more: Taking a Profit on the Wild Ride in Orange Juice and Coffee


First of Year Rally Fades, As ‘January Effect’ Proves Bogus

Written by Al Martin Monday, 09 January 2012 02:01

(1-8-12) We were consistent buyers of the March Bonds throughout the week on dips below 142.19, as we had suggested in our last week"s missive. We should still be trading them form the long side on dips. We saw dips down to 142.02, a place where we have consistently bought them in the past. Indeed we think the par 42 area is the low for now.

March Long Bonds powered ahead, breaking upside resistance at 81.35-45 area, as we suggested it would.

Our new target for the March Dollar contract is 82.00.

Feb. Oil – we have been consistently trading the Oil from the short side, as we had mentioned in our previous week’s missive. We had used rallies up to 103 as shorting opportunities throughout the week, the last opportunity coming Friday morning when the Oil got briefly back above 103. Iranian saber-rattling has done all it can do for now in terms of pushing Oil prices higher – unless there is an actual incident with Iran. We are certain that the oil will start trading under $100 in the coming week.

The recovery we saw in the Feb. Gold contract, off the 1524 lows, continued early week. We are now seeing resistance in the Gold at 1627. We were consistent sellers of the Gold on Thursday and Friday’s trade six times on rally efforts to 1620-627, covering on 10 dollar dips. Unless the 1630 area can be surmounted, we suspect the Gold will come back for a test of ...

March Silver still acting sloppy relative to the Gold. We are once again looking at the 29.00 level as the new shorting zone.580.

Read more: First of Year Rally Fades, As ‘January Effect’ Proves Bogus


Trading on the Wild Moves in Gold & Silver

Written by Al Martin Monday, 02 January 2012 16:44

(1-1-12) In line with our previous week’s forecast, we did see a gradual drift up over the week in the S&Ps. We were trading the S&Ps throughout the week from the long side. We are now flat, having sold the rest of our March long S&P positions at 1264 in Thursday’s session.

We had recommended Thursday night that the March Long Bonds be bought at 144.08, as it was our feeling that Bonds would trade above 145 in Friday’s day session, which indeed occurred, as end-of year book-squaring forced those who were short Bonds to buy in. We saw a sharp decline from the intra-day highs Friday in Bonds back to 144.19. We would be looking to buy the Bonds again on a return to 144.08.

The March Dollar contract did trade up above 8100 intra-week, meeting resistance at the 8135 area. We continue to look at that near-term resistance. However with the Euro under more pressure, we think that resistance will be overcome.

The Feb. Oil contract which we had been consistently trading from the short side – we saw establish a series of lower lows. We were short the Oil again Thursday night on the inability of the Oil to get back above $100. We believe the Feb. Oil is coming back down to $95.

Read more: Trading on the Wild Moves in Gold & Silver


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