Dec 24
Dec 23
Wednesday, December 23, 2009
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OVERNIGHT/EARLY MORNING DEVELOPMENTS
There is no standout market feature in quieter overnight/early morning trading today, as the Christmas holiday approaches.
JIM’S MARKET THOUGHT OF THE DAY *
For the past nine months the U.S. stock market has climbed a proverbial “wall of worry” to drive stock index prices to fresh 12-plus month highs. Despite more sideways and choppy trading activity at higher price levels the past four weeks, the three major U.S. stock indexes (Dow, S&P 500 and Nasdaq) will exit 2009 with nine-month-old price up-trends in place on the charts. Most impressive during 2009 was the ability of the U.S. stock indexes to continue price up-trends and score fresh multi-month highs during the historically bearish months of September and October. Now the key questions for investors as the year winds down are: Did the historical “Santa Claus rally” in stocks come early this year, as the indexes scored fresh for-the-move highs late in the year, to suggest some sideways-to-lower price consolidation early in 2010? Or, will the 2009 rally in stocks be extended come January, when investors typically do take a fresh look at reallocating their portfolio’s asset structures. Presently, technical odds do favor the stock market bulls having continued success as the new year begins. Veteran investors know “the trend is your friend,” and the price trends in the U.S. stock indexes remain solidly up on the charts.–Jim
U.S. STOCK INDEXES
The U.S. stock indexes are firmer in early morning trading today. Bulls have the overall near-term technical advantage in the indexes and are gaining fresh upside momentum this week.
S&P 500 futures: Prices hit a fresh 14-month high overnight. The shorter-term moving averages (4-, 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical support comes in at the overnight low of 1,112.90 and then at 1,107.50. Sell stops likely reside just under those levels. Upside resistance for active traders today is located at the overnight high of 1,119.80 and then at 1,125.00. Buy stops are likely located just above those levels. Wyckoff’s Intra-day Market Rating: 5.5
Today’s key near-term Fibonacci support/resistance level: 1,107.00.
Nasdaq index futures: Prices hit another fresh contract high overnight. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is located at the overnight contract high of 1,849.25 and then at 1,860.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 1,839.50 and then at 1,830.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
Today’s key near-term Fibonacci support/resistance level: 1,821.00
Dow futures: Sell stops likely reside just below support at 10,400 and then more stops just below support at Tuesday’s low of 10,370. Buy stops likely reside just above technical resistance at 10,450 and then at 10,510. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff’s Intra-Day Market Rating: 5.5
Today’s key near-term Fibonacci support/resistance level: 10,388
U.S. TREASURY BONDS AND NOTES
U.S. T-Bonds and T-Notes futures are near steady in early trading today and again hit multi-month lows overnight. Bears have the solid near-term technical advantage in bonds and notes, as four-week-old downtrends are in place on the daily bar charts.
March U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical support lies at the overnight low of 115 25/32 and then at 115 16/32. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 116 16/32 and then at 117 even. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
Today’s key near-term Fibonacci support/resistance level: 117 4/32
MARCH U.S. T-Bonds
136 23/32–lifetime high
123 –Previous Month’s high
119 5/32–18-day moving average
118 23/32–100-day moving average
117 23/32–9-day moving average
117 18/32–4-day moving average
117 14/32–second pivot point resistance
117 –previous day’s high
116 25/32–first pivot point resistance
116 16/32–previous month’s low
116 12/32–pivot point
116 5/32–previous day’s close
115 30/32–previous day’s low
115 23/32–first pivot point support
115 10/32–second pivot point support
110 3/32–lifetime low
March U.S. T-Notes: Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Buy stops likely reside just above shorter-term technical resistance at 116.16.0 and then at the overnight high of 116.23.0. Shorter-term moving averages are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Sell stop orders are likely located just below support at the overnight low of 115.28.5 and then at 115.16.5. Wyckoff’s Intra Day Market Rating: 4.5
Today’s key near-term Fibonacci support/resistance level: 116.24.0
MARCH U.S. T-Notes
123 13/32–lifetime high
120 15/32–previous month’s high
118 5/32–18-day moving average
117 12/32–9-day moving average
117 4/32–4-day moving average
116 31/32–second pivot point resistance
116 24/32–100-day moving average
116 23/32–previous day’s high
116 19/32–first pivot point resistance
116 11/32–pivot point
116 7/32–previous day’s close
116 5/32–previous month’s low
116 3/32–previous day’s low
115 31/32–first pivot point support
115 23/32–second pivot point support
110 29/32–lifetime low
CURRENCIES
The March U.S. dollar index is weaker in early trading today. Prices closed at a fresh three-month high Tuesday. Bulls still have some upside momentum to suggest prices can continue to trend sideways to higher. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 78.77 and then at 79.00. Shorter-term support is seen at 78.22 and then at 78.00. Today’s key near-term Fibonacci support/resistance level: 77.95. Wyckoff’s Intra Day Market Rating: 4.5
The March Euro is firmer in early electronic trading. Bulls have faded recently to suggest prices will continue to trend sideways to lower. Euro finds sell stop orders are likely located just below technical support at the overnight low of 1.4232 and then at this week’s low of 1.4215. Shorter-term technical resistance for the Euro is seen at 1.4300 and then at 1.4330. Buy stops likely reside just above those levels. Slow stochastics for the Euro are bullish early today. Today’s key near-term Fibonacci support/resistance level:
1.4287. Wyckoff’s Intra Day Market Rating: 5.5
GOLD
Gold is near steady in early dealings today. For February gold, shorter-term technical resistance is seen at the overnight high of $1,089.50 and then at 1,100.00. Buy stops likely reside just above those levels. Sell stops likely reside just below support at the overnight low of $1,080.10 and then at this week’s low of $1,075.20. Today’s key near-term Fibonacci support/resistance level: $1,080.00. Wyckoff’s Intra-Day Market Rating: 5.0
CRUDE OIL
Crude oil prices are firmer early today. In February crude, look for buy stops to reside just above resistance at $75.00 and then just above resistance at last week’s high of $75.65. Look for sell stops just below technical support at the overnight low of $74.25 and then more sell stops just below support at $74.00. Today’s key near-term Fibonacci support/resistance level: $73.82. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Prices were mixed in overnight trading. Not much new in the grains this week, amid holiday trading. The key outside markets are in slightly bullish posture for the grains today: steady-weak U.S. dollar, firmer U.S. stock indexes and firmer crude oil prices. The outside markets still have heavy influence have over the grains at present.
Dec 23
Wednesday, December 23, 2009
The U.S. Dollar rallied following the release of a better than expected existing home sales report and never relinquished its gains. The rise in the Dollar following the release of good economic news is another sign that investors are returning to watching traditional fundamentals for direction. Gains are being limited this week because of thin holiday trading. Longs should watch out for pre-holiday profit-taking tomorrow and Thursday.
The Dollar received a boost overnight following another downgrade of Greece’s debt, but gave back those gains when the U.S. released a lower than estimated final third quarter GDP report. The good news from the housing sector underpinned the Dollar the rest of the day and the index closed a little off its high.
The Euro finished lower. The combination of a downgrade of Greece’s debt by Moody’s and the better than expected U.S. housing report helped to apply the downside pressure.
The GBP USD added to its overnight weakness throughout the day after the U.S. released the friendly existing home sales report to finish lower for the day. Overnight U.K. GDP was revised upward to show a loss of 0.2%. The previous estimate was for a loss of 0.3%. Prereport estimates were for a loss of 0.1%. Pressure is expected to continue until the U.K. economy starts to show growth like its European counterparts.
Rising Treasury yields continued to boost the USD JPY. Optimism over an economic recovery in the U.S. is leading traders to sell the Japanese Yen. The recent rise in Treasury Bond and Note yields have become attractive to Japanese investors who have to sell the Yen to buy Dollars. Upside momentum is signaling a possible test of the October top at 92.32 over the near-term.
The Dollar closed firm against the Swiss Franc. Not only are traders looking for the U.S. economy to recover faster than the Swiss economy, but some investors are factoring in the possibility that Euro Zone sovereign debt issues may spillover to the Swiss financial system. A mid-session bounce in gold helped limit gains in the USD CHF. The strengthening U.S. economy is having a positive effect on the Canadian Dollar. Although the USD CAD has faltered the past three days, this currency pair remains inside of its October to November range. The mid-point of this range is 1.0598. This price is an important pivot. Additional pivot price support comes in at 1.0537. Look for the USD CAD to remain inside its trading range until either economy takes the lead.
The shift in risk sentiment continued to pressure the AUD USD and NZD USD. Throughout most of this year, a rise in U.S. equity markets would have led to demand for higher yielding assets like the Aussie and Kiwi, but investors are now selling these currencies while returning to traditional fundamental analysis.
Please do not hesitate to contact us at 1-800-971-2440, with any questions.
www.brewerfx.com
forexblog@brewerfx.com
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
Dec 22
Tuesday, December 22, 2009
Gold has dropped below the psychological $1100/oz level as the Dollar’s recent strength seems to finally be taking its toll on the precious metal due to their usual negative correlation. Gold’s bull run continues to unwind as investors lock in profits and shuttle money back into the Dollar. That being said, gold does have a few more near-term uptrend lines we can form. However, should our new 1st tier uptrend line give way, gold could potentially be in for a more protracted pullback towards the highly psychological $1000/oz level. Meanwhile, investors should monitor the ability of the EUR/USD and GBP/USD to consolidate and form new bases following their December downturns. Should the Dollar consolidate and top out, gold may hit bottom nearby. That being said, the EUR/USD and GBP/USD have both dropped beneath key uptrend lines in the past week, implying the Dollar could be in for more gains over the medium-term. Investors will now focus in on today’s release of U.S. Existing Home Sales followed by tomorrow’s New Home Sales. Additionally, the BoE will release its Monetary Policy Minutes. Hence, the FX markets could be in for more volatility before Christmas. Should upcoming data points exceed analyst expectations, investors may snap up the Dollar and continue to take profits in gold, and vice versa.
Technically speaking, gold has multiple uptrend lines serving as technical cushions along with 11/05 and 11/03 lows. As for the topside, gold faces topside technical barriers in the form of intraday, 12/21,12/15, and 12/7 highs along with the psychological $1100/oz and $1150/oz levels.
Present Price: $1093.10/oz
Resistances: $1096.47/oz, $1100.15/oz, $1105.05/oz, $1110.77/oz, $1115.27/oz, $1123.03/oz
Supports: $1088.30/oz, $1082.58/oz, $1079.61/oz, $1074.96/oz, $1070.53/oz, $1063.56/oz
Psychological: $1100/oz, $1075/oz, $1150/oz
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
Dec 21
Monday, December 21, 2009
The U.S. Dollar backed off a 3-month high overnight as volume began to dry up ahead of this week’s Christmas holiday. The relatively empty economic calendar along with holiday volume has the potential to create volatile trading conditions.
The March Euro is trading higher overnight. Traders will be monitoring Greece’s deficit problems as well as reassessing the possibility the Fed will begin tightening its monetary policy. Dubai debt issues may resurface today which could be a surprise for traders. Dubai is meeting with creditors to renegotiate credit terms. Look for the Euro to weaken if negotiations fall apart.
The March British Pound is trading weaker. The chart indicates the next potential downside target is 1.5980. Traders are repositioning ahead of tomorrow’s Final Third Quarter GDP report. Economists’ are guessing an upward revision to -0.1% from an earlier guess of -0.3%. This figure will be a positive for the British Pound and indicate that the U.K is getting ready to return to growth during the 4th quarter.
The Dollar is trading slightly better against the Yen overnight. A wider-than-expected Japanese trade surplus helped to limit losses early in the trading session. The Dollar could lose ground this week in limited trading.
The March Swiss Franc is trading higher. Profit-taking and signs that this pair may be oversold is helping to generate overnight upside pressure. End of the year position evening is also contributing to the strength. Don’t be surprised by a short-covering rally back to .9675.
The March Canadian Dollar is getting a boost this morning. This rally began on Friday when the oil market began to strengthen. Today’s Canadian Retail Sales Report could be a market mover.
U.S. equity markets are called higher after a strong turnaround on Friday. The lack of any major economic events and calmer conditions in the market regarding European debt issues is helping to drive up demand for more risky assets. Thin trading conditions means the possibility of violent swings.
Treasury futures are getting hit hard overnight. March Treasury Bonds are in a position to test the pre-FOMC meeting at 117’05. Traders are concerned about the growing U.S. deficit and the possibility of higher interest rates. End of the year reallocations and position evening could also exert a bearish influence on both T-Bonds and T-Notes.
The weaker Dollar is triggering a rally in February Gold. The chart indicates a move to $1131.50 is possible. On the downside, $1107.40 is a key 50% price level. Gann angle support moves up to $1102.00.
March Crude Oil is trading better but inside Friday’s range. Oversold conditions, a weaker Dollar and a stronger stock market could drive this market higher with $77.03 a potential upside target over the short-run.
Please do not hesitate to contact us at 1-800-971-2440, with any questions.
www.brewerfuturesgroup.com
futuresblog@brewerfuturesgroup.com
DISCLAIMER: Futures and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication by or from Brewer Futures Group, LLC, Brewer Investment Group, LLC, or their subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
Dec 21
Monday, December 21, 2009
March Sugar ran to and through the top of the range only to fail the following day, we are buying the March 25/22 bear put spread and selling the 2850 call as a naked leg. The trade is currently being filled at a 5 tic credit which is about $55. The risk on the trade is if the market goes above 2850 where you are short the call with the same risk as being short a futures contract from that price. The profit potential on the trade is 3 cents or $3360 plus premium received minus commission (x3).
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
There is a substantial risk of loss in trading futures and options.
Dec 21
Monday, December 21, 2009
Oil futures jumped 5 percent last week, the first weekly gain in a month, after crude stockpiles drew and Iranian forces occupied an oil well in neighboring Iraq raising concern tensions between the two OPEC nations would disrupt supplies further. Crude Oil finished the week above $73.00 after briefly falling below $69 last week. Heating Oil and Gasoline were both up but not as much as crude as the Heat and Gas cracks weakened a bit on demand for the black gold. Heat trades above $1.96 and Gasoline above $1.89. Natural Gas continued its run, rallying from $5.20 to $5.80 as this market saw more of a decline than expected in supplies to touch the $6 mark for the first time in nearly a year.
Last week was really all about the wti spreads strengthening and a rise in fuel demand spurring the flat price higher. What’s amazing is that last Monday the Jan/Feb spread sold off all the way down to -260 but never looked back to rally above -100 at the end of the week with supplies decreasing. I believed that last week would have been a bottoming out in the Crude market around $69 and that is just what happened as flatprice was supported by both technicals and fundamentals. OPEC will probably make no changes to output quotas when it meets Tuesday in Luanda, according to a Bloomberg News survey of 36 analysts last week. Last month the group pumped about 2 million barrels a day less than it did a year earlier as it works through a promised 4.2 million barrel-a-day supply cut.
Natural Gas has been on a roll the last few weeks after rallying above the significant resistance of $5.20. As supplies start to shrink with a very cold and wintry time for the Northeast, flat price will try and test the $6.00 level again. I would recommend buying the pullbacks in this market if you see the price get to $5.20-$5.35.
***chart courtesy Gecko Software’s Track n’ Trade Pro.
Past performance is not necessarily indicative of future results.
Dec 21
Monday, December 21, 2009
John Mauldin and George Friedman were in Dallas this week. Several hundred people came out to hear their thoughts on the world and the economy.
For what it’s worth, Freidman’s Stratfor service and Mauldin’s Thoughts from the Frontline and are both terrific reads.
I take it as a bullish sign that so many people made time, in the middle of the day, for an event like this.
While the mood in the room was that the easy money has already been made in the equity markets, people were looking for places to money to work.
Sentiment Soaring …
Up-and-Down … the ride continues. Still, sentiment is quite bullish. How bullish? AAII’s weekly survey showed the fewest bears since April 30th. That was just about the time the Russell 2000 rolled-over to start an 8% correction.
Market Commentary.
Here is a daily chart of the Dow Jones Industrial Average. It shows the market at a decision-point. The month-long consolidation has taken the market to a place just above major support and resistance level … And back to the upwards sloping trendline.
Traders expect a big move after periods of compressed range (like the one we are in now). Bollinger Bands are often used to represent volatility. You can construct by plotting bands two standard deviations on either side of the 20-period moving average (note the pink bands in the chart above). One of the indicators I keep an eye on, is the band-width of these Bollinger Bands (it is plotted in the bottom pane of the chart shown above). When it gets narrow for an extended period, that “squeeze” puts me on alert for expanding volatility.
What do you do? You watch price. This is the classic buy point in an up-trend. On the other hand, there’s everything else.
Insight: Price is the Primary Indicator.
What do you think is the most bullish indicator of our markets? It’s not a trick question; the answer is “price”.
The markets have held-up nicely, throughout this rally, despite lots of bad news about the economy. And that, in-and-of-itself, is bullish.
It doesn’t matter what technical analysis indicator you use (increasing negative divergences and selling on down days … or less positive momentum and market breadth), the markets have given us a clear message recently. Price is the primary indicator, and it has stayed above support.
While there will likely be a bearish divergence when the trend finally ends, it is clear that a strong uptrend trumps most bearish divergences.
The Implications of America’s Rapidly Expanding Debt.
Here is a video from Consuelo Mack’s WealthTrack, about the lessons of history. Best selling author and historian Niall Ferguson talks about the seismic global economic and market shifts of recent years mean for our future, particularly the longer term implications of America’s exploding debt.
Here is the transcript.