Market Commentary for Wed. 9/14

Hello All,

 

It turns out the rumor of China buying Italian bonds was nothing more than just a rumor.  No new developments out of Europe, and positive corporate earnings allowed stocks to post another day of gains.  Nothing more than consolidation until we find out what Europe's fate is, and we await a skewed reaction to option ex on Friday.  The choppy action in the Eurocurrency is evidence of the rapid change in sentiment, as the larger pattern still remains bearish.  With Gold ticking back up after holding support around $1800, another wedge pattern is evident where we can get a larger break to the upside if there is no resolve with Europe.  Treasury yields are not necessarily correcting in a dramatic fashion which leads me to believe that there is still room for further deterioration as investors flock to safety in light of the SNB's currency intervention.  The Fed stated today that it would buy about $16 billion over the next month as part of its reinvestment of maturing assets, as the central bank may decide to swap short term treasuries with long term securities to cut borrowing costs.  We also note that PIMCO has increased its treasury holdings to its highest level since Dec. 2010 after going flat, which in hindsight backfired given the run this year.  On the energy front, API data reported a draw of 5 million barrels of crude as gasoline inventories rose 2.7 million barrels, pretty much a wash.  We await tomorrows more reliable DOE data to give us a better signal to get in.  I re-iterate the importance of being a trader rather than an investor in many of these markets as the day to day news continues to fluctuate ahead of our FOMC announcement next week.

 

No trades in light of my upcoming trip, feel free to give me a call if you need any specific advise intraday.

 

Arman Vahdatinia

President, Chief Market Strategist

1-877-338-EXPO [3976] ext. 25

www.ExpoFutures.com

*There is a substantial risk of loss trading futures and options.  Past performance is not necessarily indicative of future results.

 

Can China save the day? or should I say month...

Hello All,

Concerns over a default in Greece remains at the forefront of many investors minds as Moody's may cut various European bank ratings because of their Greek holdings.  Surprisingly, investors are taking any positive rumor and running with it as the markets staged a late rally based on the fact that China may begin to purchase Italian bonds.  This conveys the image that individual EU members have the ability to seek help from outside the so called euro zone.  We continue to keep an eye on our own treasury yields as it will eventually be the last bubble to pop, although I do anticipate continued near-term strength at record low interest rates.  With quadruple witching coming up on Friday we cannot give too much merit to action contained within the current range, so a move in either direction shouldn't be surprising given the amount of short open interest.  We look back to Friday's action where we had currency option ex and the shorts pressed heavily; maybe we will get the same type of action on the S&P this Friday, which may gave Bernanke the ammo he needs to pull the trigger on QE3 next week.  With respect to the Eurocurrency, my 1.35 level was reached a lot sooner than expected and that opens the door for lower numbers towards 1.30.  Given the inherent weakness, we have to remain open to larger corrective rallies as 1.40 is now psychological resistance.  It will all depend on whether the Asian markets will buy up the China/Italy story, and then again we do not know what other 'news' may break in the coming days.  The same story bodes for the energy sector, as European health/demand drives current prices. A rising wedge pattern seems to be the most prevalent indicator to note for Crude, which can result in a large breakdown sometime over the next 5-7 trading sessions.  I still remain in the bear camp, but will be sitting on the sidelines.

As a reminder, I will be travelling to Europe on Friday to conduct a couple seminars and will be returning the following Friday.  I will not be releasing any overnight trades in preparation of my trip.

Best,

Arman Vahdatinia

President, Chief Market Strategist

1-877-338-EXPO [3976] ext. 25

www.ExpoFutures.com

*There is a substantial risk of loss trading futures and options.  Past performance is not necessarily indicative of future results.

Looking to sell into further weaknes..

Hello All,

We had a mixed day leading into Bernanke's speech, and at the end of the day we didn't receive any new data.  A third round of stimulus is to be discussed in the upcoming FOMC meeting on the 20-21st, and ultimately it will depend on whether the Euro tanks before then.  Trichet's speech early this morning was of caution with respect to the euro zone's economy growing more slowly than had previously been expected, stating that the central bank see's "significant downside risks" in an environment of "particularly high uncertainty."  Given the breakdown to my 1.3870 target i mentioned in Tuesdays report, the door is now open to test the 1.35/1.36 region within the next two weeks.  Keep in mind that we have currency option ex tomorrow, so we may get a quicker than anticipated slide or we will teeter around 1.40 until next week.  On the energy front, Crude is running into major resistance at the $90 level, and if Europe unravels at the seems I still anticipate prices to go back below $80.  DOE data reported a draw of 4 million barrels of crude, with gasoline inventories rising 200k barrels.  And ending the day with Obama's job proposal worth $450 billion in stimulus we have yet to see how the market will react.

Will wait for further weakness to get short.  Most likely won't see an opportunity until Sunday evening.
Best,

Arman Vahdatinia

President, Chief Market Strategist

1-877-338-EXPO [3976] ext. 25

www.ExpoFutures.com

*There is a substantial risk of loss trading futures and options.  Past performance is not necessarily indicative of future results.

Trade Recommendations for Wed. Sept. 7th

Hello All,

Following zero jobs growth on Friday, the big news of the day was the SNB pegging it's currency maintaining a bid above 1.20 vs. the Euro.  Everybody is watching developments out of Europe, there are negotiations with respect to proper collateral for a Greek bailout, and Italy is to vote on austerity measures amid a strike.  The Euro breached key support at the 1.40 marker and will most likely attempt a test of the previous low around 1.38 on the current leg.  On the energy front, oil was weak on the heels of bad employment data, but surprisingly ended the day strong.  Overall, a lot of mixed signals on the day, and although Gold had a setback in reaction to the SNB move, the U.S. 10 yr yield hit a new low at 1.91% and in my opinion is the true barometer for our economic health.  The S&P has had its worst ever 3 day start for September, and we look towards unemployment claims later in the week along with separate economic addresses from Bernanke and Obama.  

1)  Sell Sept Emini S&P at the market (1171), with a 1190 stop.  Exit Thurs night.

2)  Sell Oct. Crude at 86.74, with a 87.76 stop.  Exit 83.19.

3)  Sell Sept. Euro at 1.4088, with a 1.4140 stop.  Exit 1.3870.

To receive my market commentary via email, please submit a request.

 

http://www.expofutures.com/futures-trading-research.php 

Best,

Arman Vahdatinia

President, Chief Market Strategist

1-877-338-EXPO [3976] ext. 25

www.ExpoFutures.com

*There is a substantial risk of loss trading futures and options.  Past performance is not necessarily indicative of future results.

Trade Recommendations for Wed. Sept. 7th

Hello All,

Following zero jobs growth on Friday, the big news of the day was the SNB pegging it's currency maintaining a bid above 1.20 vs. the Euro.  Everybody is watching developments out of Europe, there are negotiations with respect to proper collateral for a Greek bailout, and Italy is to vote on austerity measures amid a strike.  The Euro breached key support at the 1.40 marker and will most likely attempt a test of the previous low around 1.38 on the current leg.  On the energy front, oil was weak on the heels of bad employment data, but surprisingly ended the day strong.  Overall, a lot of mixed signals on the day, and although Gold had a setback in reaction to the SNB move, the U.S. 10 yr yield hit a new low at 1.91% and in my opinion is the true barometer for our economic health.  The S&P has had its worst ever 3 day start for September, and we look towards unemployment claims later in the week along with separate economic addresses from Bernanke and Obama.  

1)  Sell Sept Emini S&P at the market (1171), with a 1190 stop.  Exit Thurs night.

2)  Sell Oct. Crude at 86.74, with a 87.76 stop.  Exit 83.19.

3)  Sell Sept. Euro at 1.4088, with a 1.4140 stop.  Exit 1.3870.

To receive my market commentary via email, please submit a request.

 

http://www.expofutures.com/futures-trading-research.php 

Best,

Arman Vahdatinia

President, Chief Market Strategist

1-877-338-EXPO [3976] ext. 25

www.ExpoFutures.com

*There is a substantial risk of loss trading futures and options.  Past performance is not necessarily indicative of future results.

Light volume for unemployment data, anything goes..

Hello All,

It seems as though fund managers will stay on the sidelines until next week as we didn't see an influx of capital, rather position squaring ahead of tomorrows unemployment data.  Analysts are expecting roughly 75k jobs to have been added, and on the lower side Goldman Sachs has actually revised their number down to 25k from 50k.  Expectations are being set really low, and if they do come in the markets may tumble on light volume; inversely, if we match last months number around 120k jobs it could provide enough fuel to rally above 1230 on the S&P.  Time will tell.  And the ultimate wild-card will be news over the weekend from Europe, as many of us will be out of town allowing big action for Sunday evening.  Tomorrows data will likely lay the groundwork for what we can expect out of the Fed at their next meeting on the 21st.  In all likeliness we'll be back below 1100 on the S&P before then, at which point we may get more stimulus to keep us afloat.  3rd times a charm, maybe it'll work this time around.

No trades into the report.  Hope you all have a fun and safe labor day weekend.

Best,

Arman Vahdatinia

President, Chief Market Strategist

1-877-338-EXPO [3976] ext. 25

www.ExpoFutures.com

*There is a substantial risk of loss trading futures and options.  Past performance is not necessarily indicative of future results.