Weekly Market Summary For Week Ending 5-12-06
By AL MARTIN
Results for trading May 8-12, 2006:
On the week, we traded a total of 64 positions, comprising 158 lots, generating aggregate gross profit of $21,375.
Median margin commitment on the week was $23,770.
Gross unrealized loss carryforward was $-0-.
Individual trade printout available to subscribers upon request.
SPX: The index fell back hard in late-week trade, after consistently stalling at the 1325 resistance level in early-midweek trade, generating a confirming short-selling signal in Thursday’s trade, when the index fell below 1316.50 (1321 SPM), reconfirming the short hold as the 1311-13, 1307-8, 1298-1301 & 1293 support level/zones proceeded to give way by Friday’s closing bell, prompted by late-week, large dollar-volume selling in the oil & precious metal stocks by all 10 of the so-called deep offshore ‘smart Republican money’ trading pools that we attract, with the next downside target being the 1284/86 support zone, with a short-covering signal being generated on the first close above 1293.
USM: The contract continued to decline for the 5th consecutive week, on the back of generally stronger than expected ECR’s, a poor U.S. Treasury 10-year note option, and a failure to include a ‘pause comment’ by the FOMC, in Wednesday’s release sheet, generating superb and consistent shorting opportunities down to the 105.16 area, in mid-late-week trade.
Watch the coming week’s housing, PPI/CPI, data for further direction, with a short-covering-led technical bounce back to 106.16 possible at any time, given the technically oversold condition of the contract, combined with a substantial floor institutional & professional trade short position already established.
DXM: The contract continued to fall for the 5th consecutive week, as bullish dollar cross-rate spreads continued to give way to increasingly bearish fundamentals. The contract remains a short sell on rallies back to 84.30, or better. However, watch out for a possible short-covering-led technical bounce back to 85.00-85.30, given the dynamic, short-term, oversold technicals & the huge increase in the shorts.
SIN: Thursday’s trade saw the first signs of a classic upside blow-off near-term top being put in place, as shorts panicked above 15.05, adding fuel to weak-handed retail odd-lot buying, taking the contract up to an intra-day high of 15.30, before fresh floor & professional trade shorting drove the contract back. And we continue to like shorting the contract on rallies to 14.92 or better.
HGN: Frenzied short-covering action finally drove the contract to test the 4.00 level in end-of-week trade, and we continue to believe that the magic 4.00-4.10 area will constitute the shorting opportunity of the decade.
WN: Upside blow-off action was seen in Friday’s trade, as the contract exploded above the magic 4.00 level, creating superb shorting opportunities at 4.06 or better. Wheat has never been able to sustain their rally above 4.00 for more than 9 consecutive sessions, and we don’t believe history is about to change.
CTN: The contract was dragged up by late-week strength across the boards, creating a fresh shorting opportunity above 52.00, for the first time in 3 weeks, and we like scalping the contract from the short side up to the 52.30 resistance level.
LBN: Lovely short-scalping action, as the contract fell below the 331.60 support level, in mid-late-week trade, setting up a series of tasty $1-2 short-scalps down to 327.60. As long as the 331.60 level is not breached on a closing basis, continue to short rallies, with next downside support pegged at 323.50.
SBN: Superb 2-way scalping action on both sides of the 17.20/30, 17.50/55, 17.75/85 support/resistance zones was available throughout the week. Continue to scalp the ranges as above, as long as the 17.00/05 support area & the 17.75/85 resistance area, are not breached on a closing basis.
KCN: Superb shorting action available throughout the week, with the key shorting signal being generated in early Thursday’s trade, on the failure to rally above the 1.0980/1.1030 resistance zone, with a shorting confirmation as the market traded below 1.0720 and re-confirming on the trade below 1.0590, with a fresh 1.0215 intra-day low for the move, in Friday’s trade. Continue to scalp rallies from the short side, unless and until such time as the 1.0590 level is breached on a closing basis.
CCN: Good 2-way scalping action, as the contract moved closer to the 1600 annual high. However, we believe the contract is overbought, with a near-term correction back to 1543 likely. Continue to watch the 1553/54 previous resistance, now support, level, for further direction.
OJN: Superb long-side scalping action, in Monday-Thursday’s trade, as the contract continued to trade in the same pattern for 8 consecutive sessions, with the late-Friday trade reversal finally breaking the pattern. Although the contract is dramatically overbought, basis its underlying supply/demand equation, the contract still wants to move higher. Thus, long-side scalping on dips is still the order of the day, unless and until such time the 1.5370 level is breached on a closing basis.
CLM: After the successful test of key technical support at 68.40, the contract continues to rebuild its geopolitical risk premium, despite ongoing bearish fundamentals. For now, continue to short rallies back to 73.00, unless or until such time as the 73.50 resistance level is breached on a closing basis.
As always, we welcome subscriber e-mails with your trading questions.