Trade Recommendations for Wed. Aug. 17th

Hello All,

The 3 day win streak in stocks has ended with bank stocks leading the way lower. The event of the day was the meeting between Sarkozy and Merkel, where not much supportive data was drawn. Trader's were looking for the possibility of a euro-zone bond, which was dismissed, and the proposal for extra euro-zone governance was only re-iterated rather than implemented. European GDP was only up 0.2% which echoes thoughts of a recession which followed 0.8% in the 1st quarter. If anything, out of all the nations one would have expected decent data out of Germany which posted 0.1% in comparison to 1.3% in the 1st quarter. If the German economy is weak, will they still be willing to support neighboring 'bailed-out' nations? On the home front, we had weak July permits and new construction data which is at about half of a healthy economy. All in all, Gold tells the story up $30 on the day, and a breach of $1800 should re-ignite last week's jitters. We do not have much data to look out for tomorrow aside from DOE data, where we just had API post a 1.7 million barrel build in Crude. Fundamentals aside, the rebounds in the S&P and Crude can be viewed as a rising wedge and are beginning to fail under the 50% retracement. With volume diminishing, and prices rising, there is no significant commitment of real buyers and thus I expect a snap lower which should be in the cards over the next 24 hours and be the start of a 5th leg lower. The same continuation pattern is evident in BAC, which leads me back to bank shares leading the way lower. The FDIC has reported that problems banks are at a 20 year high, which negates the possibility for bank regulations to ease up, even though relaxed rules are necessary to give lending a boost. A state of paralysis invokes anything but growth.

1) Sell Sept Emini S&P at the market (1190), with a 1206 stop. Exit 1154.

2) Sell Sept. Crude at the market (87.06), with a 88.50 stop. Exit 81.35.

3) Sell Sept. Euro at the market (1.4394), with a 1.4460 stop. Depending on how severe a push lower can be seen through tomorrow will determine whether we may see 1.40 this time around. Exit to be determined.

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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.

What to make of the 80 pt range in the S&P..

Hello All,

Another wild day on the books which can be associated to margins being raised for Gold, and the short selling ban of financials in Europe.  The sell-off in gold could have been interpreted that it was safe to put the risk trade back-on, however technicals still point to a 5th leg lower for the S&P.  You have to ask yourself why a ban on short selling was implemented, and if it can truly support a market from collapsing.  The same ban was placed back in 2008, and in my opinion there are many ways around the ban to have a net short position.  This action can backfire, and is a signal of further weakness to come.  The inkling of positive news from our labor department wasn't significant enough to be accredited to the days strength.  Closing out the week with the possibility that France's credit rating can still be downgraded, leaves little reason for investors to be long into the weekend.  Even though Standard & Poor's let Lehman Brother's positive ratings slide by a few years ago, they seem to be on the ball this time around by boldly downgrading the US.  It's only a matter a time before the next shoe drops, as we're all in this together.  Investors that have hung onto their losses this week with aspirations that the market will rebound higher can easily pull the plug on another visit towards 1100 which will trigger another large round of liquidation.  Today's bounce stalled at the 38% fibonacci retracement and failed miserably as the market fell 20 points in 20 minutes.  Fasten your seat-belts and buy some put insurance, it will be a windy road through October.

No trades tomorrow, ranges are too wide as high frequency trading accounts for at least 60% of the action.

 

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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.

S&P chops, Gold glides, and only traders survive..

Hello All,

After yesterdays dead cat bounce by the Fed's vow to keep interest rates low for another 2 years, we are once again worried about the solvency of European banks and the debt surrounding Italy and Spain, and now France's credit rating is on the verge of a downgrade.  France is the fourth largest bond issuer of government bonds and is playing a big part in bailing out Spain and Italy.  A recipe for disaster, and each day we find new ingredients.  The possibility for a recovery on the S&P was in the cards today, but after failing to take out 1160 on a midday rally, we went back into sell mode.  We will probably continue to see choppy action for the next two sessions and test wide support/resistance levels before we see another breakdown.  Until we have a better grasp around European debt, and a consensus in Washington surrounding our budget deficit, we should get use to the volatility.  In my opinion, the only other option left on the table for the Fed is to actually CUT taxes instead of initiating QE3.  But what do I know.  On the energy front, Crude inventories reported a draw of 5.5 million barrels which didn't really jar the market based on how bullish it was.  The big ticket of the day was the yellow metal cracking $1800, which opens the door to $2000/oz in the coming months.  

1)  Sept. Emini S&P - look to accumulate short positions on any bounce as I suspect my worst case scenario of seeing 890 may very well be in the cards if Europe unravels.  I wouldn't be surprised if we see a print anywhere from 1160-1200, nor would I be surprised if we awake to the market below 1100.  No trades overnight as they're not taking any prisoners even with really wide stops.

2)  Sept. Euro - this market has been long overdue for a major break below 1.40, so we may look at buying Dec. puts and leave the day to day currency action on the back burner.  She looks vulnerable with the debt problems, but Trichet must be playing puppeteer somehow.

3)  Sept. Crude -  Given the strength overnight along with the S&P, it is possible we can get a retracement up towards 84.60, which would be an ideal sale.  But we'll have to act in real time rather than call out these trades 10 hours in advance.

 

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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.

What the FED?

Hello All,

Not a great way to start the week ahead of tomorrow's Fed announcement.  On the heels of a historic downgrade in the U.S.'s credit rating, the Fed may have little left in its arsenal to prevent further devaluation in US stocks.  Nonetheless, the Fed HAS to do something tomorrow to hold the market at current levels and prevent a continued downward spiral, without losing much more credibility.  Gold and Treasuries were the only real winners of the day, and there is no indication that these moves are close to running out of steam.  My 1116 target on the S&P has come and gone a lot sooner than expected, and given the unprecedented nature of fundamentals, we will probably sit on our hands awaiting the Fed announcement.  Crude has fallen to its lowest level in 9 months, and if we are in a true double dip recession, we could possibly see another $20 underneath.  Once again we're trading human psyche, with the VIX fear gage near 2009 highs.  Are we done with the margin calls? or are we in for another leg lower?....History in the making folks..Stay tuned.

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 Fri. Aug. 5th

Hello All,

What a day!  After today's action, 1116 on the S&P doesn't seem as far fetched as it did in last nights report.  It is assumed that tomorrow's payroll data is already baked into the cake, but Asia and Europe should continue to pressure prices to close out the week.  We have our FED rate decision next Tuesday where Bernanke may speak about another easing program, but I don't think he'll play that card until it's absolutely necessary, and who's to say if it will work.  We have interest rates at practically zero, we've gone through two quantitative easing programs that have pumped $2.3 trillion into the economy and we still can't stand on our own two feet.  Have we pulled all the tricks from our sleeves?  The only real market that investors fled to was treasuries, which came as a slight surprise not to see metals advancing.  We saw a serious flight to liquidity across the board, and with the VIX spiking I would have to assume margins to be raised which will lead to additional liquidation.  At the end of the day, as much as I hate to say it, we're heading back into a recession.  If Spain and Italy require a bailout then I think a double dip is inevitable, but we cannot rule out what our fancy policy makers can think of next.  The catalyst for today's action was the ECB held rates steady overnight and resumed purchasing of government bonds.  Trichet's statement was fairly dovish and acknowledged that uncertainty had heightened, which may be a signal for a policy shift.  A sign of what may become reality is how Switzerland and the BOJ intervened to protect their currencies, but we'll see how long it lasts and ultimately whether any intervention will prevent markets from collapsing.

1)  Sell Sept. Emini S&P at 1207.50, with a 1222 stop.  Exit 1116.

2)  Hold Sept Euro shorts, lower stop to 1.4140.  Exit 1.3870.

3)  Stand aside Crude.  Lower prices are still in the cards, but don't want to play this one overnight, as $2 bounces can come out of nowhere.

 

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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 Thurs. Aug. 4th

Hello All,

ISM data was the worst since Feb., and ADP reported a gain of 114k jobs, while Crude inventories reported a build of 950k barrels.  The markets reacted negatively to the reports as the S&P hit a new 2011 low before snapping its 7 day losing streak.  We bounced fiercely off 1230, which was just above my support level of 1225 (The April high).  Now that we've bounced off support, we are in no mans land and should wait to either sell into strength or additional weakness.  The head and shoulders pattern discussed last week has become more evident with failure at the 76% retracement off the 2009 low.  If data over the next two days suggests additional slowing (which is expected) then the plunge protection team will be hard at work to prevent a collapse.  In the long run,  the worst case scenario would allow for 890 on the S&P, but a test of 1116 would be the first stop if September weakness is in the cards this year.   On a positive note, we have energy prices drifting lower which will help the economy on a cost basis.  We have the ECB and BOE rate decision overnight, but there aren't any expected changes.

1)  Sell Sept Emini S&P at 1274, with a 1290 stop.  Exit 1223.  Given the circumstances we will continue to hold out for the proper risk/reward levels.

2)  Sell Sept. Crude at 93.15, with a 94.10 stop.  Exit 90.70.

3)  Sell Sept. Euro at 1.4310, with a 1.4400 stop.  Exit below 1.40.

 

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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.

Debt deal goes into law - we await ISM, ADP, claims, and payroll

Hello All,

The debt bill passes the Senate and was put into law with Obama's signature.  With the assumption that the crisis may be over it seems as though it is only beginning given the markets reaction.  The yield on 10 year notes fell to 2.6%, and Gold gained $40 to reach an all-time high.  The safe haven risk off trade was in full effect, and we await ADP and ISM data tomorrow, unemployment claims on Thursday, and payroll data on Friday.  The S&P has now turned negative for the year and if the bulls stand a chance we would require a reversal above 1270 in the next few sessions.  The market isn't necessarily in panic mode, but it will be interesting to see how Asia and Europe react overnight.  Can we extend the longest losing streak since Oct. 2008?  Moody's and Fitch claim that our AAA credit rating isn't in jeopardy, but we await Standard and Poor's update.  On the energy front, API reported a draw of 3.3 million barrels of crude which has yet to support the market, so we'll wait and see what DOE reports tomorrow, although macro economic data should trump any weekly data.  The week is far from over as we have a lot of wild cards yet to be revealed.  I don't mind being flat overnight, but we'll put an order out there just in case.

1)  Sell Sept Emini S&P at 1258, with a 1274 stop.  Exit 1225.  We'll wait and see if we can get a better risk/reward from higher resistance.

 

2)  Exit Sept. Euro shorts at the market.  Will look to re-enter in the morning.

3)  Await DOE report before entering Crude shorts.

 

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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.

They take it down to the wire...leaving the Senate with no choice..

Hello All,

The House votes unanimously in favor of raising the debt ceiling and leaves the Senate between a rock and a hard place.  It's a no brainer that the Senate will in all likeliness pass the bill rather than be blamed for the calamity that may follow otherwise.  The proposal still falls short of the $4 trillion in budget cuts which Standard & Poor's recommended, so a credit downgrade is plausible in the forseeable future.  For those that may have been expecting a relief rally after the news broke, it's time to come back to reality.  The economy has been slowing and will continue to do so in the 2nd half of the year.  We should have our eyes on unemployment data which is set to release on Friday, and will be the main focus of an economic recovery moving forward.  The US dollar should find footing over the next 36 hours with no default in site, and setup a nice swing trade as focus will eventually be shifted back on Europe.  Investors also have their eyes on the the JY and SF as their respective fiscal policymakers can intervene to prevent further appreciation from current levels.  On the energy front, ISM data this morning pulled the rug from under oil traders as the market fell over $4 before stabilizing.  Barring any Mid-East violence, we shouldn't see $100 oil anytime soon.  We have API and DOE data to digest over the next couple of days, but analysts are expecting another build of roughly 2 million barrels.

1)  Resell Sept. Emini S&P at 1283, with a 1299 stop.  Exit 1252.

2)  Sell Sept. Euro at the market (1.4239), with a 1.4312 stop.  Exit below 1.40.

3)  Sell Sept. Crude at 95.30, with a 96.70 stop.  Exit 93.18.

 

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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.

No vote tonight. It's up to the democrats, if not Obama

Hello All,

The republicans cannot agree amongst themselves, and as we've kicked the can down the road, so do we for Boehner's vote.  Ultimately, I'm glad to see politics beginning to be put aside and governing to be the main duty, but we're a little too close to the wire.  It doesn't seem as though we'll make any progress before we close out the week tomorrow, which will leave a big decision on Obama's lap.  Will Obama exercise the 14th amendment and raise the debt ceiling over the weekend to prevent panic on the 1st?  Anything can happen over the next few days, but I would assume stocks and commodities to be lower, and treasuries and metals to be higher.  Even if we're on the path to having our credit rating downgraded to AA, it's still only one notch below perfect.  Stay tuned folks....it's history in the making....with huge gap down potential come Sunday.

1)  Hold Sept Emini S&P shorts from 1306, lower the stop to 1303. Let it ride to 1225.  With no additional news overnight, I would expect Asia and Europe to close weak.

2)  Sell Sept Crude at the market (97.30), with a 98.60 stop.  Exit next week around 94.50.

3)  Continue to stand aside Euro until we're under 1.41.

 

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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.

And the beat goes on.... investors continue to pull out

Hello All,

The saying goes, when in doubt - stay out.  The red flag has officially been raised now that we've dropped back below the 1300 marker on the S&P.  Without any progress on our debt ceiling, investors took money off the table ahead of tomorrows unemployment claims and pending home sales data.  The US dollar bounced off the May low as investors booked profits on bets against the greenback.  Even though circumstances may not call for the money supply to tighten with higher interest rates, it seems inevitable at this juncture.  Nothing over the past year has been 'normal' and this radical shift may temporarily put a halt in the global recovery, but will put us on a different track towards solvency in the long run.  The Euro gave back yesterdays gains and echoes the issues we still have across the Atlantic.  With a possible credit rating downgrade here in the states, I will continue to take the contrarian stand and buy dollars as the Greece bailout issues resurface.  Crude inventories showed a build of 2.3 million barrels today which hinted at less demand near $100. 

1)  Sell Sept Emini S&P at 1306, with a 1322 stop.  Exit 1225.  If the bulls don't step in before the weekend, I would assume the previous top from April 2010 would be a place to ultimately test support.

2)  Crude Oil - not sure what type of bounce we'll get, if any. But will probably look to get short again tomorrow.

3)  Stand aside Euro.  Waiting for 1.41 to break before pressing shorts.

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.