We await jobless claims and home sales - turn of the tides?

Hello All,
 
Stocks fizzled out today and Gold once again hit a new high as treasury yields slumped.  The most notable move of the day was in the Euro as it continued its 2nd day surge higher.  If the dollar is being slammed so hard, one would expect Gold to have cracked $1300 easily by now given the action in the Euro.  But flight to safety is being divided between various currencies, treasuries, and metals all with different weights.  In my opinion a true barometer of market health is the black gold, crude oil.  After receiving DOE data that we had a surprising build of 1 million barrles, the market was met with heavy resistance.  Folks, keep in mind that this build was in light of having the Enbridge pipeline shut down for a week.  And we still had an increase in supplies.  Economic growth is definitely slowing, and as I've been noting for the past couple of weeks, government intervention or notions to intervene will send these markets out of whack.  We have jobless claims tomorrow expecting 450k along with housing sales to be at 4.1M.  I would expect strong housing data which would strengthen our dollar, but weaker than expected jobless claims which would add pressure to stocks.  Nothing but more 'mixed' data, and we'll make the best of it.

1)  Sell Dec. Emini S&P at 1137.25, with a 1146 stop.  Exit near 1115.
 
2)  Hold Dec. Gold shorts from 1296.7, with a 1307.9 stop.  Exit 1265.
 
3)  Hold Nov Crude shorts from 75.72, with a 75.72 break even stop.  Exit near 72.
 
4)  Euro - stand aside.  Resistance is up above at the 1.35-1.36 region, but this is simply a blow-off before we come to our senses.  The market can remain irrational longer than we can retain our sanity or our pocketbook, so we'll hold out before initiating another short.

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Best,

Arman Vahdatinia
Futures & Options Strategist
1-877-338-EXPO [3976] ext. 25
www.ExpoFutures.com
 
*There is a subtantial risk of loss trading futures.  Past performance is not necessarily indicative of future results.

Fed announcement and the aftermath. Stocks, Dollar/Euro, Gold, Crude.

Hello All,
 
The Fed leaves rates unchanged and based on deflation concerns is ready to accomodate the economy as deemed necessary, but did not announce further quantitative easing.  Which basically means they're ready to print more dollars and continue purchasing debt, which dropped a ton of bricks on the dollar.  Inversely Gold and the Euro rallied to new highs, and the foreseeable stimulus helped push stocks up to break the previous' days highs and take out some stops.  Although stocks actually ended the day lower, we have to to note the action prior to the Fed announcement.  Housing starts climbed to a 4 month high with expectations on new construction at 550,000 houses, but it actually came in at 598,000.  This fact alone provided the data necessary to pressure gold bugs to take some off the table prior to the Fed announcement.  The one sector that we do need to see strength in for the basis of a recovery is housing, which ultimately would be bullish for stocks.  No matter which way you dice is, the result is dollar negative and positive for stocks and as contrarian as I am, that just seems to easy of a trade.  The Fed hasn't necessarily acted, just left the door open, which I thought was already the case and should have been baked into the cake.  We'll have to wait and see if there is follow through of the days trend, or if we'll get a reversal on Thursdays full moon.

1)  Sell Dec. Emini S&P at 1148, with a 1157 stop.  Exit near 1120.
 
2)  Sell Dec. Euro at 1.3324, with a 1.3357 stop.  Exit 1.3164.
 
3)  Sell Dec. Gold at 1296.70, with a 1307.90 stop.  Exit 1265.
 
4)  Sell Nov Crude at 75.72, with a 76.45 stop.  Exit near 72.
 
Best,

 
Arman Vahdatinia
Futures & Options Strategist
1-877-338-EXPO [3976] ext. 25
www.ExpoFutures.com
 
*There is a substantial risk of loss trading futures.  Past performance is not necessarily indicative of future results.
 

Futures Trading Recommendations for Tues. Aug. 3rd

Hello All,
 
A great way to start August as investors seeked riskier assets and set the US stock market surging.  Better than excpected manufacturing and construction spending data fueled the fire early.  The dollar continued its decline and inversely the Euro reached our exit target and then some.  Crude prices perched above $81 for the first time since May, and although I think the Euro and Crude can reverse from these levels, I still feel that my 1132 exit target in the S&P still needs to come in.  That being said, we could get another positive day across the board tomorrow, then a possible set-back Wed/Thurs prior to the unemployment data to be reported on Friday.  What we'll continue to keep our eye on is the decoupling of stocks and bonds, although they both ended Friday positively it is now evident that treasuries have been jumping the gun more often than not.
 
1)  Hold Sept. Emini S&P longs, raise protective stop to 1108.  Exit 1132.  At 10 week highs, and above the 200 day moving average, I'm pretty certain we'll be able to reach our exit target.  But the real questions is how much will we be leaving on the table by possibly exiting early?  As the economy continues to grow at a slow yet steady pace, I would have to assume our equity markets will follow the same tempo.  Although it seems all systems are green, we're coming up on our wildcard employment data, so money management is 10x more important than attempting to predict the markets correctly.
 
2)  The Sept Euro contract reached our exit target of 1.3160, and is poised to possibly test 1.3250 in tandem with our higher S&P target.  Not necessarily worth trying to squeeze out the last few drops or even attempting to top pick, but technically we are close to seeing a minimum pullback of about 500 points.  A key indicator is the fact that call pricing is not necessarily being bid up as once would expect with this type of action.  If the premiums aren't there, neither is the consensus and a reversal should be in the works over the next few sessions.  I've held out long enough to implement a credit spread and feel tomorrow will be ideal, get in contact with your respective broker here at the office and we'll be able to get you onboard.
 
3)  Sell Sept. Crude Oil at 83.10, with a 84.50 stop.  Exit $79.  A lower dollar and continued support from equities pushed the market above $80.  The uptrending support channel dating from 5/24-6/26 will now come into play as resistance.  The market has retraced 100% of its fall from 6/20-7/4, and 83.18 would be a 24% extension of this range.  This level interesect directly with the uptrending resistance channel; however we are currently $2 shy.  This implies 2 scenarios: 1) we will hit the 83.18 level early tomorrow morning, or 2) we will initially retrace to the downside over the next couple of sessions and then make an attempt for the extended 84.46 level into the end of the week.  If the latter holds true, we will attempt to buy in lower, but at the moment it does not coincide with my theory for stocks.
 
Best,

Arman Vahdatinia
Futures & Options Strategist
1-877-338-EXPO [3976] ext. 25
www.ExpoFutures.com
 
*There is a substanstial risk of loss trading futures.  Past performance is not necessarily indicative of future results.

Trade Recommendations for Fri. Mar. 12th

Hello All,
 
I'm glad we didn't place any trades today as their wasn't much going on, we would have been sitting ducks.  The markets were little changed with a stable dollar after government reports showed that the trade deficit narrowed, indicating a slowing economic recovery.  We've been covering the same ground for the past 3 days and we're close to topping.  The FOMC minutes may be the catalyst to push these markets lower, so there is still the possibility of making new highs into Sunday/Monday.
 
1)  June Emini S&P probably will be stagnant in the 1140-1150 region.  Not worth trading tomorrow, but if you must you should be trading from the longside just in case the market takes off to end the week at a new high.
 
2)  Buy June Euro at 1.3670, with a 1.3604 stop.  Exit 1.3782.  The march currency contracts are expiring on Monday and major rollover took place today with a huge spike in volume.  The market has put in a bowl type of bottom and we'll have to see how she reacts to resistance at 1.38 going into the FOMC meeting.  But I suspect the announcement will be bullish for the dollar and inversely send all related markets lower after Tuesday.
 
3)  Sell April Crude on a stop at 81.12, with a 82.45 protective stop.  The market has respected the uptrend channel since the beginning of Feb. and as soon as we breach it look out below.  We've been in a congestion pattern which should come to a climax tomorrow.  If we break above 83 then we may very well see the 85 region for a double top before we descend back below 75.  If we cannot get a rally above 83 by Sunday then the market should be heading straight for 77, then a minor bounce to 81, before ultimately heading towards 70-72.  Along with the FOMC meeting on Tuesday, we have crude option expiration on Wednesday along with another inventory report, so it will be interesting to see how they end this week.
 
Best,
 
Arman Vahdatinia
Futures & Options Strategist
1-877-338-EXPO [3976] ext. 25
www.ExpoFutures.com
 
*There is a risk of loss trading futures.  Past performance is not indicative of future results.

Market Update....

More often than not, we find ourselves concentrating on the micro rather than the macro, thus keeping the ‘big picture’ in mind is prudent. While theS&P is in a bull market up-trend on the daily timeframe, there are periods of overbought and oversold levels making ‘higher highs’ and ‘higher lows’.  Assuming the uptrend continues, ‘buying dips’ would consist of looking for oversold conditions to enter.   But how do we anticipate a dip? How do we know a market is overbought or oversold?

The chart below shows the percentage of stocks in the S&P that are above their 50-day moving average.  As you can see, 80% of stocks are above their 50-day moving average, showing an overbought condition.  Although shorting an uptrend is not very safe, you may consider selling vertical credit spreads to capture option decay and limit your risk.

As a technical trader, price action speaks for itself.  The charts tell us everything we need to know, yet we cannot simply ignore fundamental shifts in the market.  For example, many fund managers are still on vacation and shouldn’t return until after the upcoming 3-day weekend.  Not to mention we have an unemployment report due this Friday, which would lead to considerably less volume.  Low volume allows the market to skew, and presents a good ‘breathing’ opportunity, in essence a ‘dip’.  While many traders would view a correction as the end to a bull market, many seasoned traders see this as a blue light special on isle 9!  Time will tell, and if the opportunity presents itself – which side are you on?