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Bounce in Spoos Creates Trades Across the Board
Written by Al Martin Sunday, 11 January 2015 23:39
(1-11-15) Last week we finally saw a bounce after 5 losing sessions in the Spoos. We were buyers of the Spoos finally at 1990 after having covered our shorts on the move under 2000. We rode our longs up all the way back to the 2040. We think that the Spoos now are overbought once again and are sellable at current levels. The bounce in the Spoos also created downward pressure on the March Long Bond contract. Our standing orders at 146.08 were hit midweek, allowing us to take nearly 2 whole points out of the contract by Friday's session, as the Bonds began to come back in that the factors propelling the Bonds now make them more immune to declines in the Spoos.
License To Print Money in Oil & Gold Continues
Written by Al Martin Monday, 05 January 2015 00:57
(1-4-15) We see the March Gold contract continuing to trade in the 1170-1200 zone. We have been consistently shorting the contract on rallies back to 1200, covering on dips to 1180. We had been buyers at 1175, selling at 1195. We continue to like that trade. We think the recent upticks in Gold are overdone with both Dollar and Bond strength being counter-indicators for the Gold.
The Oil – we continue to short on $1-2 rallies off of preceding day lows. Oil particularly volatile in Friday's thin session. We were sellers once again at 53.85, covering at 52.35 in late session action. We continue to maintain short positions, doubling up and covering half down, so we are continuously short the Oil and in the money. Hard test at 5200 in the Feb Gold contract on Friday. We would expect that to be retested and breached in Monday's session.
Substantial cash buying in the 10 and 30 year Treasury Bonds, lifting futures in Friday's trade as European and Japanese yields reach all-time lows, making our Treasuries look good. This is not a fear bid trade, but is much more a Dollar-US Treasury Bond trade wherein European and Japanese investors want to hold long Dollars and long US Treasury Bonds to capture their significantly higher yield visavis their own markets.
Soft and tropical commodities continue to fall in line with our previous week's suggestion. We were short the March Sugar on our 14.49 sell-stop in Friday's session. We filled m.o.c. and covered at 14.17. We would expect a hard test of 14 cents in the coming week's trade.
We did see some pickup in the Juice contract as the March Juice failed to attract fresh sellers under 1.40. We think however that this was just a short covering rally and would look to sell the March Juice on any continuation back to 1.45.
The March Lumber contract – still coming under pressure We are still short from 341.60 but would look to cover if it holds in the 320 area in Monday's session.
Grains continue to move lower. March Beans coming down almost every day last week where markets were open. We would expect a hard test of $10 in Monday's trade.
We had warned of lower prices coming in the March Wheat contract which was severely overbought above $6.40. We have been trading the contract from the short side for the last 2 weeks. Again our 5.8975 sell stop was hit in Friday's trade, allowing us to take 8 cents out of the contract yet again. We think the Wheat could still come down to the 5.60 area to revisit its previous lows. We had warned the March Corn contract would break $4 in last week's trade. Indeed we did see the break midweek, wherein our final 3.9975 sell stops were hit. We took 4 cents out of the trade in Friday's session but we expect the Corn to again move down another 20 cents.
The March Cotton-- all finished to the upside for now. We had warned that the Cotton would break 60 cents in last week's trade. Indeed in Friday's action we saw the Cotton under 60 cents again. We expect the Cotton has another 2 cents to go downside in the coming week's trade.
The severe overvaluation in the March Cocoa contract -- now correcting with a test of 2900. We would expect 2900 to give way and the Cocoa to come down to 2850.
We also warned the March Coffee would come down for a hard test of 1.60 Indeed we saw a test under 1.61 in Friday's session. We think the Coffee also has lower to go, next downside target being 1.55.
March Silver contract continues to be overbought relative to the Gold. Hence the more severe downside condition of the Silver when Gold gets taken lower. We continue to short the Silver on moves to 16.10 or better covering on dips down to 15.70. We think that the Silver ultimately works down for a test of 15.00.
March Platinum contract – we continue to short on moves to 1220, covering on $20 dips. We continue to like that trade. Also Palladium – we continue to short on moves above 800 covering on $10-20 dips.
The March Copper contract – we continue to look to short on rallies back to 2.85, covering on 5 cent dips.
Spoos in La-La Land as Rest of Market Comes Back Down to Reality
Written by Al Martin Sunday, 28 December 2014 23:33
(12-28-14) Spoos continue to advance throughout the holiday-shortened week. We would expect them to advance to the end of the year, establishing a close of 2100. However after the first week of January we expect the spoos would become shortable again.
Read more: Spoos in La-La Land as Rest of Market Comes Back Down to Reality
Equities & Bonds Both Move North; One's Got To Be Wrong
Written by Al Martin Monday, 22 December 2014 00:15
(12-21-14) In late week action the Spoos started coming off the Oil. We continue to see the March Long Bonds higher. We were buyers again on our standing orders at 1.4304 in Thursday's overnight action. We were able to sell the Bonds on our standing order at 1.4416 in late Friday trade, as we saw the Spoos had a nonsensical upside reaction to Yellen Speak. Yet Bonds also continue to move north. One has to be wrong. We think as usual it is the Spoos that are again overbought. Although we were long the Spoos we got out of our long positions at our standing orders at 2073 late Friday and sold them away at 2074. Even though next week has a seasonal propensity to be higher for equities, we still think the Spoos are rich and are prepared to hold a short position at current levels. We also are looking to continue to buy the Bonds on any dips back to the 1.4324 area.
Read more: Equities & Bonds Both Move North; One's Got To Be Wrong
Record Trading Profits Continue as Global Deflationary Pressures Build
Written by Al Martin Sunday, 14 December 2014 23:36
(12-14-14) We bought the March Long Bond contract on our standing order off the dip Thursday at 143.16, our standing sell order at 145.16 filled in late Friday action. We continue to trade the Bonds from the long side, as long bond rate globally continues to indicate building deflationary pressures.
The Jan. Crude Oil contract – we of course continue to trade
from the short side. We are now taking out an average of $2-3 a day. We had
sold the Oil again at 59.50 covering at 58.50 in Friday's session, selling off
the lift at 58.75, covering at 57.75. We are short the Oil again off the late
bounce, now short at 58.06. We will be able to take another dollar out of the
trade in Monday's session. However it is entirely possible that technical
bounce is coming as Oil is now reaching its 20 year inflation-adjusted moving
average of $56.24.
Read more: Record Trading Profits Continue as Global Deflationary Pressures Build
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