Better Chinese Trade Data Creates Fresh Shorting Opportunities

Written by Al Martin Monday, 15 October 2012 02:53

(10-14-12) Special Note -- if the boards lift early Sunday night, traders should not wait and get short all the boards.

 Despite continued deterioration in the economic news flows throughout last week, we did see better than expected Chinese trade data over the weekend. This will likely prompt an overnight blitz in the markets in Sunday night’s trade, setting the boards up for fresh shorting opportunities in Monday's day session, mindful that 15 out of the past 17 Mondays have been lower. We are seeing technical selling on Sunday nights and Monday mornings. We would expect several Long Bond contracts, which we traded from the long side all of last week, to fall back in Sunday night’s trade. We would be looking to buy again on a dip back to 149.00.

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Boards Tire as Record Metal & Soft Commodity Surpluses Loom

Written by Al Martin Sunday, 07 October 2012 22:35

(10-7-12) Last week we saw the Dec. Long Bond contract come down in late week action, giving us a buying opportunity on our standing order at 147.12, from which we remain long. We will look to be sellers in Monday’s day session on our standing order at 148.02.

The Dec. Dollar contract also backed off its recent highs above 80.00, back down to test the 79.30 support area. We think the Dollar is a buy in the79.30/ 40 area.

The Nov. Oil – superb shorting opportunities throughout the week. We had sold the Oil again at 91.75 in early Friday morning trade, taking another $2 out of the contract, bringing our total to $7 taken out of the Nov. contract on the short side throughout the week. Oil clearly looks lower and we would expect $85 to be tested within the next 10 trading sessions, as global Oil inventories build to records -- and demand falters.

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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.

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