Weekly Market Summary For Week Ending May 19. 2006
By Al Martin
Trades (May15-19, 2006)
In Monday’s GLOBEX session trades, we L SIN 14.36 S 14.46, L-4 WN 4.0375 4.05, SS SIN 14.23 C 13.23.
In regular session trades, we SS-2 DXM 84.30, C 84.20, L-2 CCN 1553 S 1563, SS-2 SBN 17.30 C 17.20, SS-5 OJN 1.5750 C 1.5600, SS CTN 52.05 C 51.55, SS KCN 1.03 C 1.0230.
Carryforward SS SIN 13.33, SS-4 LBN 328.
In Tuesday’s GLOBEX session trade, we SS SUB 13.33 C 13.08, L CLM 68.70 S 69.70.
In regular session trades, we SS-4 LBN 328 C 323.50, L-2 CCN 1536 S 1546, SS-2 DXM 84.37 C 84.17, L CLM 69.85 S 70.35, L CLM 69.00 S 69.30, L-5 OJN 1.5740 S 1.5810, L KCN 1.0230 S 1.0265, SS-2 SBN 16.97 C 16.87.
Carry forward SS-4 LBN 325.50, L-4 WN 3.9950.
In Wednesday’s GLOBEX session trade: we went L-4 WN 3.9950 S 4.07, L SIN 13.53 S 13.68, SS-2 DXM 84.00 C 83.70.
In regular session trade: we went L-2 CCN 1553 S 1540, SS CLM 69.30 C 69.00, L-4 WN 4.0850 S 4.1150, SS-4 LBN 325.50 C 324.50, SS-4 DXM 84.20 C 84.35, SS-2 SBN 17.14 C 17.04, SS-4 WN 4.18 C 4.1550, SS CTN 51.30 C 50.80.
Carryforward SS-4 LBN 323.
In Thursday’s GLOBEX session trade, we SS-4 WN 4.23 C 4.20, SS CLM 68.70 C 68.20.
In regular session trade, we went L-2 USM 105.28 S 106.00, SS CTN 49.80 C 49.55, SS CLM 69.00 C 68.50, L-5 OJN 1.50 S 1.5060, SS-4 WN 4.2250 C 4.190, SS-4 LBN 323.00 C 319.50, L-2 SBN 16.62 S 16.67.
Carryforward SS-4 LBN 320, SS-2 CCN 1550, SS-4 WN 4.23.
In Friday’s GLOBEX session trade, we SS-4 WN 4.23 C 4.1550, L-2 DXM 84.60 S 85.00.
In regular session trade, we SS-2 CCN 1550 C 1540, SS CLM 68.55 C 68.25, L-5 OJN 1.4915 S 1.4975.
Carryforward L-2 CCN 1515, L-2 SBN 16.00, SS-4 LBN 318, L-4 WN 4.1225.
For the week, we traded a total of 45 positions, comprising 110 lots, generating aggregate gross profit of $26,615. Median margin commitment: $23,870. Median time of trade: 1.46 hrs. Unrealized carryforward losses/gains: +$2,370.
SPX: The index fell back for the second consecutive week, completing a 6% reversal, intra-day high-to-low, with Thursday’s intra-day low at 1260, as the 1284/86, 1280, 1272.50/75 & 1262.50/65 support level/zones all gave way on a closing basis, paving the way for Friday’s end-of-week light-volume short-covering-led rally, which received some help from option-expiry-related buying, with the new, initial, upside target being the 1272.50/75 previous support, now resistance, zone.
Watch market internals on any continuation rally. If they do not improve, and if the Treasury bond market yield curve continues to flatten and ECR’s continue to show weakness, in the coming week’s trade, be ready to short the SPM’s on the first down-ticks, with downside support being pegged at SPX 1253/55.
USM: The contract finally rallied, after holding the 105.00 level, as inflationary up-ticks in the CPI & Fed regional manufacturing surveys caused the professional trade to put on so-called ‘yield flattening’ trades, causing a rally in the long end of the curve, as the voices of the ‘no-pause’ crowd grew louder, giving the long end some solace.
Watch inflationary sub-components of the coming week’s calendar for direction, but, for now, the contract remains well-bid and should be scalped from the long side on pullbacks.
DXM: After reaching a low in the 83.20's, the contract finally had a good-volume short-covering-led technical bounce, trading up into the 85.10-30 fresh shorting zone, as we had suggested in our previous week’s summary, as the dollar firmed on the back of fresh inflationary signs off the calendar and on a general pullback across the commodity boards.
We believe, however, that this is nothing more than an oversold technical bounce, and we continue to like scalping the short side, on rallies to 85.00 or better.
SIN: A good, old-fashioned, overbought sell-off, cracking the contract $2.00, or 13% off its 15.20 10-day highs, as ‘Joe Sixpack’ weak-handed longs came out of the market in droves, leading to margin liquidation selling in volume, threatening the survival of many of the nouveau ‘electronic re-seller’ non-member retail firms.
We suspect, however, that we are near the end of forced long liquidation, and with professional shorts still in the markets, look for a ‘tech & spec’ led rally if the $12. level holds.
HGN: Good volume fund & commercial selling throughout the week, punctuated by small floor spec long & short-covering-led rally attempts, with odd-lot retail ‘Joe Sixpack’ longs now being largely flushed out.
Watch out for fund & floor instigated rallies, as there is no real technical support in the contract until we get back to 3.32-34.
WN: Superb 2-way scalping action, as the contract ran up to the 4.23 area, however with good volume pullbacks, causing an excellent 4.08-4.23 2-way trading range.
Watch for long-side scalping opportunities on pullbacks to 4.12, and if not held, to 4.08.
LBN: Superb shorting opportunities throughout the week, with the 321.30 & 318.30 support levels taken out on a closing basis and the 311.50-313.50 support zone about to be tested, and, if the zone holds, look for a tradeable bounce back to test 318.30.
CTN: Superb shorting action as the 50.00 support level finally gave way, with next downside support being pegged at 48.50. Continue to short failed rallies back to the 50.30 previous support, now resistance, level.
SBN: The contract succumbed to good volume fund & force margin selling, generating an emergency shorting signal, when the 16.62 level was traded through, with the 16.00 level being held, on a closing basis, in Wednesday’s trade, leading to a good-volume floor spec buying & short-covering rally in Thursday-Friday trade, with our new shorting target being a failed test of the 16.50/55 previous support, now resistance, zone.
KCN: Narrow range-bound trading, yet, with consistent shorting opportunities on rallies to 1.0240 or better, early-midweek.
Watch the $1.00 level. If it continues to hold, expect a 3-to-5-cent bounce. If not, look for next support in the 97.50-98.50 zone.
CCN: Superb shorting action on failed rallies back to the key 15.53 previous support, now resistance, level, with the 15.15 bottom of the 15.15/18 support zone holding.
Look for the first down-tick below the zone for fresh shorting opportunities back into the old 1498-1506 support/resistance zone.
OJN: Superb and consistent shorting opportunities, as the contract gave up the 1.60, 1.5740, 1.5370 & 1.50 support levels, all on a closing basis, with next downside support at 1.4740.
However, selling dried out at 1.49-1.4950 late-week, and we think a bounce back to 1.5370 is in the offing, given the continued propensity of the floor & professional trade to want to scalp from the long side.
CLM: Superb and consistent, 2-way scalping action, as the contract continues to hold the 68.40 technical support & 60.00 resistance area, on a closing basis.
We continue to like shorting rallies, however, noting that the majority of volume continues to be on the downside, and that geopolitical concerns continue to wane.
As always, we welcome subscriber e-mails at firstname.lastname@example.org, with your trading questions.