Japanese Credit Downgrades & Middle East Unrest Roil Global Markets
Written by Al Martin Monday, 31 January 2011 00:10
(1-30-11) Last week we saw continued liquidation in a variety of commodity complexes, especially the most economically sensitive ones. This included a fear bid coming into US Treasuries late week. Indeed we had bought the March Long Bond contract at 119.28 Friday morning, selling that contract at 121.16 in Friday afternoon session. Bonds were topped out once again at the 121.75 area and then backed off. Have no doubt Bonds will resume rallies as tensions in the Middle East continue to mount and the fear bid persists.
Joe Six Pack Silver Buyers Get Shellacked -- Again
Written by Al Martin Sunday, 23 January 2011 22:12
(1-23-11) We saw the March Long Bond contract get pummeled late week with good lifts Friday. We were buyers of the contract at 119.28 in Friday night trade, selling at 120.08, taking 3/8 of a point out of the contract. The sudden loss of confidence experienced in the US Treasuries, partly on Chinese comments regarding diminishment of US Bond holdings, we believe is nothing more than a blip in the road to higher Bond prices.
Oil Keeps Getting Shilled Up to $100 – Even Though It’s Not...
Written by Al Martin Sunday, 16 January 2011 22:34
(1-16-11) Last week we saw the Bond auctions lift late week as US Treasury Long Bond auctions got off well with the 3- and 10-year auctions rated as excellent and the 30-year auction rated as fair, sufficient to engineer a small relief rally effort in late Thursday’s trade. The Bonds continue to want to move higher. We expect 122.00 to be retested in the December Long Bond contract by the end of this week.
Everyone Wants Dollars, But Volatility Still Rules
Written by Al Martin Monday, 10 January 2011 02:42
(1-9-2011) Much to the chagrin of many of the Unwashed, we see continuing strength in the March Long Bond contract late week. Indeed we were buyers of this contract again in Wednesday’s trade at 119.20. We began to sell the contracts out at 121.00 in Friday’s trade. Despite a Dollar rally and continuing melt up in equities, we still see US Treasuries well-bid, although we suspect the Bonds will be vulnerable to a dip early next week as fresh Treasury supply comes to market. However the Treasury Bonds are exhibiting strength due to an ongoing fear bid.
The March Dollar contract, which we warned would breach recent highs, indeed touched those highs intra-day in Friday’s trade. With the Euro under pressure the euro would need to come down to 128.50 for the March Dollar contract to establish new highs. We expect this contract will breach 128.75 in the coming week’s trade. Everyone wants Dollars.
Final Week Volatility Creates Opportunity
Written by Al Martin Sunday, 02 January 2011 20:43
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(1-2-11) Last week we told our readers that the March Long Bond contract would reach 122.00 in this week’s trade. Indeed, in the final year-end push in the Bonds, the March Bonds closed at 122.04 in Friday’s session. We had accumulated the Bonds in the Tuesday dip at an average of 119.16, and we were sellers at 122.00 in Friday’s trade, taking down a tasty 2-1/2 whole point profit in the trade.
Also we had suggested that commodities would move up generally throughout the week, that Gold, Silver and Copper would move up, and that there would be a rocky road for soft and tropical commodities. Indeed this has come to play.
The March Dollar contract did move lower late week, as we saw year-end Dollar selling. However this is simply a year-end technical phenomenon. We think the March Long Bond contract will start to move higher again in Monday’s trade.
Also we had warned that the Feb. Crude Oil contract would reach $92 in this week’s trade. We were short sellers at $92, taking 50 cents out of the contract. However the Oil still wants to go higher.
Fresh break-outs in the Gold – we were buyers in the Gold on our buy-stops above $1410. We were sellers at $1420 in late Friday’s trade, taking $10 out of the scalp. Gold is clearly overbought now. Look for some continuation to the upside early week followed by a sell-off.
The March Sugar contract was the feature trade of the week. We had been consistently warning that Sugar was overbought. Indeed we saw Sugar lose more than 10% of its value in Thursday’s trade. Our 32.99, 31.99 and 30.99 sell-stops were all hit on 10-lot contracts. The Sugar did recover, and we were buyers of the Sugar Thursday night on a move back above 31.65. However we would look to sell the Sugar again on any retest of 33.00.
The March Orange Juice was also volatile last week, consistently holding 1.60 on dips. We were buyers in the 1.61 area throughout the week and sellers on rallies back to 1.6450. We would continue to look at the 1.6450 – 1.6650 area as fresh shorting opportunities in the Juice.
The March Lumber contract finally started to come down under liquidation pressure, as Joe Six Pack buying eased off. We are currently short the March Lumber at 325 and intend to hold it, as we believe the contract will come back under 300.
Good move Friday in the March Beans. We had been trading the March Beans from the long side all week as it consistently demonstrated strength. Friday closed above $14. Be careful however, since the Grains are severely overbought, relative to underlying supply/demand fundamentals.
The March Silver contract also was higher but dragging relative to Gold. We like selling this contract on any test of 31.00.
The March Copper – also breaking out into fresh highs. We were buyers of the Copper midweek on the breakout above 4.33. However the Copper is also severely overbought at current levels.
March Coffee – we were consistent short-sellers at 2.41 in Thursday’s trade, covering on the dip back to 2.39. Coffee did establish a close back above 2.40. However there’s plenty of Coffee on the planet…
March Cocoa came down for a test of 3000 Thursday night and held, prompting us to buy the contract at 3003. We took $30 out of it Friday. However the March Cocoa does look tired at current levels.
March Cotton – we were consistently short-selling on the dips below 1.45, covering at the 1.3950 area. Cotton will be back late week but we believe Cotton continues to remain a sell on moves back above 1.45.
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