Weekly Market Summary For Week Ending 6-15-07
By Al Martin
(6-18-07) Individual trades for week of June 11-15, 2007:
In Monday’s session, we went L-4 CLN 64.78 S 65.03, L-4 USU 106.08 S 106.12, SS-4 HGN 3.3350 C 3.3300, L-4 CLN 64.85 S 65.10, SS-5 OJN 1.48 C 1.4740.
In Tuesday’s trade, we went SS-4 HGN 3.3350 C 3.3300, L-9 CCN 1843 S 1848.
In Wednesday’s trade, we went L-4 USU 105.26 S 105.30, SS-2 HGN 3.28 C 3.27.
In Thursday’s trade, we were L-9 CCN 1889 S 1899, L-4 USU 106.05 S 106.09.
In Friday’s trade, we were S-6 HGN 3.35 C 3.3460.
The USU contract fell to a 104.11 bid market, early week, followed by a sharp 2+ point rally, creating numerous long-side scalping opportunities into Friday’s 106.16 intra-day high, with the contract exiting the week on a 106.10 bid print. With our expectation of the 10-year cash yield retesting 5 c%, and likely help from Monday’s NAHB numbers, we would expect a continuation rally to test the 107 area, early-week.
Superb, double shorting opportunity at 83.00 in the DXM/DXU contracts, both generating 30-point gains, as the dollar contract was pressured by the bond market rally. Look for further decline to test the 82.40 support level of the USU contract, early-week.
Worthwhile long-side scalping off the hold of the 12.90 area in the SIN contract, with likely rally continuation up to the 13.38 area. However, fundamentals continue to weaken, and we would expect a pullback to test 13.05 by mid-to-late-week trade.
Good, 2-way scalping action in the HGN contract. However, we believe the contract is toppy in the 3.42/44 area & expect a pullback to retest the 3.3150/33.50 zone, by midweek, as the supply/demand equation turns progressively more bearish.
Good, end-of-week rally in the SN contract, falling just short of the 8.4875 ten-day highs. However, near-term deliverable supplies would suggest that both the SN & CN contracts are overbought by as much as 30 cents. Trade accordingly.
The shill rally in the CTN contracts continued for the second week, with the contract exiting the week at 54.92, or about 5 cents overbought relative to near-term fundamentals. Trade accordingly.
The seasonal rally in the LBN contract continued, with the contract reaching a 301 intra-day high, in Friday’s trade. With fundamentals the most bearish in 16 years, we think 300-305 is it on the up side & expect a retest of 275 before expiry.
Good, late-week rally action in the SBV contract, up to Friday’s 9.00 intra-day high, on the back of higher oil, despite very bearish near-term fundamentals. Watch the CLN contract. When it falls back, so will the SBV, as we are looking for a retest of 8.75.
Several efforts to sell down the KCN contract during the week, only to rally back to test the 1.1550 area. However, the shill rally is weakening under the pressure of sales into the cash market & increasingly bearish supply fundamentals, and we continue to look for 1.10 to be tested before contract expiry.
Good rally in the CCN, with the contract lifting $110. off its weekly low by Friday’s intra-day high, in line with our previous predictions. Look to buy the CCU on a pullback to the 1890 area.
Good-volume liquidation continued in the OJN, taking the contract to a 1.35 low in Thursday’s intra-day trade, before short-covering lifted the contract to test 1.40, in Friday’s late-session trade. Look to a re-short on failed rallies back to the 1.43 area.
The CLN contract moved steadily higher in mid-to-late-week trade, moving above $68. in Friday’s trade, making the contract about $2. overbought relative to fair value. Trade accordingly.
As always, we welcome subscriber e-mails to firstname.lastname@example.org with your trading questions.