Futures Market Blog

03.03.09

Pending home sales and auto sales today to be capped off by Senate Banking Committee testimony by the Fed Chair and the Sec of the Treasury talks after him about the budget.

Last night’s surprise was the Bank Of Australia leaving interest rates unchanged. This motivated short covering as the consensus had expected yet another rate cut.

Current views, speculations and suggestions

Mar Yen: neg with res at 103.59
Mar Swiss: neg with res at 85.78.
Mar EC:  neg with res at 126.69.
Mar Canadian: potential reversal day
Mar BP:  pos with support at 139.
Mar ES: neg with res at 726.50
Mar NQ: neg with res at 1110
Mar Russell: neg with res at 382.00
Mar Mini Dow: neg with res at 6980
Apr Gold: neutral with res at 959
May Silver: neg with res at 13.39
Apr crude: pos with support at 38.50

Longer term spread idea: from 12.22 we are long April crude at 44.90 and short Dec crude at 52.50 for a differential of 7.60.  On 1.07 could have bought April at 52.10 and sold Dec at 59.83 for 7.73.

May Soybeans: neg with res at 8.645
May Wheat: neg with res at 5.22
Mar Ten Year: neutral with res at 119.18

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International Markets

Mar Euro Bund: pos with support at 123.50
Mar Dax: potential reversal day
Mar NK:  neg with res at 7360

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N.B.: if you initiate a trade using any of these numbers use a stop at least equivalent to 2 ½%. Repeat: use stops.  Don’t think about using stops. Use stops.

Futures trading entails considerable risk and is not for everyone. An account can lose more than its initial investment. Stops are not necessarily filled at the stop level. Past performance is not a guarantee of future results.

USD/JPY Daily Commentary for 3.3.09

The USD/JPY continues to stabilize along our 2nd tier downtrend line as investors show hesitation after February’s impressive run.  While it has been easy to be positive on the USD/JPY over the last month with the Carry Trade unwound and the Japanese economy decomposing at a faster rate than America’s, the medium-term downtrend still looms large.  The USD/JPY has significant barriers to break through, including the highly psychological 100 level, before we can feel comfortable with the prospect of a lasting uptrend.  If the U.S. should continue to release negative data while the financials crumble, the USD/JPY may be forced downwards with U.S. equities.  Investors are currently waiting to see if S&P can hold 700 and whether the U.S. steps in to nationalize Citigroup and AIG.  Additionally, investors will be keeping a close eye on U.S. Pending Home Sales since the crisis began with a contraction in the housing market.  Fundamentally, we maintain our resistance of 98.25 with fresh resistances of 99.05, 99.64, and 100.30.  To the downside, we find supports of 97.66, 97.22, 96.56, and 95.96.  The USD/JPY is currently exchanging at 97.65.

EUR/USD Daily Commentary for 3.3.09

The EUR/USD is sitting right on our medium-term uptrend line, holding onto dear life after balancing on our 1.2555 level.  The performance of the EUR/USD over the past 24 hours shows us investors aren’t quite ready to give up on the medium-term uptrend considering a drop beneath would likely lead to a sharp leg down.  However, the picture isn’t pretty, and it’s difficult to find a reason why the EUR/USD will turn around and head for an uptrend.  With the U.S. economy in shambles, it would take a massive shift in investor sentiment to alter the downwards wave taking place.  Investors are waiting for America’s Pending Home Sales data coming this morning.  Discouraging data could lead the S&P futures below 700 with the EUR/USD following suit.  On the other hand, we could see buyers entering to give a temporary boost on oversold conditions.  Fundamentally, we maintain our support of 1.2555 with 2nd tier and bottom-end supports resting at 1.2514 and 1.2458, respectively.  To the topside, we hold our resistances of 1.2634, 1.2690, 1.2761, and 1.2822.  The EUR/USD is currently exchanging at 1.2632.

GBP/USD Daily Commentary for 3.3.09

The Cable found some support around the psychological 1.40 area as expected despite the large selloff taking place in U.S. equities.  However, the Cable failed to close above our 1st tier downtrend line and will likely extend its losses with a possible retest of January lows coming.  The GBP/USD is weakening Tuesday after Britain released a much worse than expected Construction PMI.  Therefore, with Net Lending to Individuals and Mortgage Approvals each declining yesterday, the housing crisis in Britain is ongoing.  Meanwhile, the S&P futures are in a freefall after dropping below 2008 lows.  Considering the positive correlation between the Cable and U.S. equities, we maintain our negative outlook on the GBP/USD.  Fundamentally, we maintain our resistances of 1.4078, 1.4119, 1.4173, and 1.4219.  To the downside, we hold our supports of 1.4023, 1.3964, 1.3905, and 1.3841.  The 1.45 level still serves as a psychological barrier to the upside with 1.40 serving as a cushion to the downside.  The GBP/USD is currently exchanging at 1.4059.

The ES followed through from late Tuesday’s 1-2-3 top as the market opened soft and traded lower for the first 90 minutes of trading on Wednesday. The ES reached 751.25 support and bounced to 765.25 around noon. The sprint was reversed and the ES dropped to 752.50 and then turned back up. There was a sprint to 770.75 that fizzled, but buyers came back in after the ES reversed from 757.25 and the market went on another sprint higher to the 778.75-779.50 resistance zone.

That 779.50 level was the high as the ES dropped 19.25 points to 760.25 in the final minutes of trading.

The volatility is picking up, so it should offer good setups both ways. At the moment, shorting bounces is going to offer the better odds trade. The 778.75-779.50 resistance zone was soundly rejected, and both the bulls and bears would like to revisit that area to sell on Thursday. The market had been in a trading range, but after popping through the top that reversal was telling.

On Thursday, if there is early weakness beware of a reversal in the first 30 minutes or so. If there is early strength instead, that would set up a better trade by shorting the move as soon as the upside fizzles/reverses. If the market drops back towards the Wednesday lows, and cannot quickly reverse, then the market will be back in trouble. However, if there is a sharp drop that can reverse from down around the 752.00-751.25 area, then the market will still be “okay”. If the ES goes back under the 748.00-747.50 zone without reversing, then a retest of the 740-739 major support could be in the cards.

Good Trading,

Mike Reed

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The foregoing has been prepared solely for informational purposes and is not a solicitation, or an offer to buy or sell any security. Opinions are based on historical research and data believed reliable, but there is no guarantee that future results will be profitable.

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02.20.09

Final trading day for March crude.

Core Consumer Price Index out at 8:30.

The rally yesterday in the EC on the speculation that Germany will unleash its own stimulus package quickly dissipated as the German chancellor backed away from specific initiatives at the press conference.

A better than expected DOE report in oil set off a short covering rally in expiring March crude.  Short lived.
Tone in the stock market the least two sessions has been horrible. Just a steady grind lower.

Gold Relative Strenght at cautionary levels:

Current views, speculations and suggestions

Mar Yen: neg with res at 107.60
Mar Swiss: negative with res at 85.10
Mar EC:  neg with res at 126.55
Mar Canadian: pos with support at 78.66
Mar BP:  neg with res at 144.20
Mar ES: neg with res at 792
Mar NQ: neg with res at 1192
Mar Russell: neg with res at 425
Mar Mini Dow: neg with res at 757
Apr Gold: pos with support at 960 (remains the reciprocal of hopelessness)
Mar Silver: positive with support at 13.75
Mar crude:  (expires Friday)

Longer term spread idea: from 12.22 we are long April crude at 44.90 and short Dec crude at 52.50 for a differential of 7.60.  On 1.07 could have bought April at 52.10 and sold Dec at 59.83 for 7.73.

May Soybeans: neg with res at 8.97
May Wheat: neg with res at 5.36
Mar Ten Year: pos with support at 121.31

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International Markets

Mar Euro Bund: possible reversal day
Mar Dax: poss but below daily support of 8099
Mar NK:  neg with res at 7676

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N.B: if you initiate a trade using any of these numbers use a stop at least equivalent to 2 ½%. Repeat: use stops.  Don’t think about using stops. Use stops.

Futures trading entails considerable risk and is not for everyone. An account can lose more than its initial investment. Stops are not necessarily filled at the stop level. Past performance is not a guarantee of future results.

The Trend Trader helps to identify the current trend status of your favorite markets. Each contract in the table is represented by a directional tendency for both the Minor and Major trends.  Two up arrows identify a Bullish Trend - two down arrows a Bearish Trend - one of each a Neutral Trend. The Trend Trader not only helps us to stay on the right side of market direction, but it also helps us avoid those markets without a trend. You can even use the grid as a spread matrix too - buying strength and selling weakness. Before you place your next trade, be sure to consult the Trend Trader.