RI's Trading Notes

RI's Trading Notes

As of May 02, 2008

050208: The US dollar is fighting to hold its recent lows in spite of a very bearish sentiment toward the greenback. However, there appears to be anecdotal evidence suggesting there may be a bottom coming in on the US economy. Recent data suggests the dramatic drop in short term interest rates and substantial fiscal stimulus are having an effect. Couple this potentially bullish scenario for the greenback with the fact that many of the bull moves in various commodity markets look to be getting old (and maybe a little tired too) and one has the makings of serious pivot point in the market. Energy, metal, grain and many soft commodities saw dramatic moves higher over the past year as the US dollar moved to new low after new low. Being cyclical in nature though, one ought to expect some consolidation if not outright correction in the not too distant future. As one market observer commented, <i>'The best cure for high commodity prices are high commodity price'</i>. Specifically, sugar, cotton and wheat have broken down in the foods and fibers and palladium in the industrial metals. Watch Copper for an interesting short idea as a break below $3.80 in earnest may lead to a more dramatic downside move. 
110207: In what can be only called a collective move against the US dollar, all major currencies (as well as many bench market financial commodities) are moving to historic highs as the United States deals with the 'credit crisis' created through its housing market bubble. Many markets have hit upside targets and one ought to expect some sort of correction considering how many markets are 'going parabolic'.  
091407: The US dollar is once again under attack as many world currencies are running against the greenback. With the US fiscal year end coming at the end of September there is little to support the greenback until that point. The Euro along with the Canadian dollar are breaking to new highs and the market's anti-dollar, gold, has broken higher as well. Of particular note this week, bond prices continue to surge higher suggesting the recent credit crunch is taking inflationary pressure out of the market. Grain prices continue their upward march. CBOT Wheat is now over $3.00/bushel higher than the weekly breakout suggesting prices (along with many other grains) are getting over extended. 
081707: In a week where credit markets are imploding, many of the established trends over the past year are coming into question. While most of the major markets remained within the defined trends, there have been some significant counter trend moves coupled with actual reversals. Specifically, the Canadian dollar and Euro. have put in tops vs the US dollar. Confirming the currency trend reversals, Gold, Platinum and High Grade Copper have now joined Silver and Palladium in registering bearish reversals. In the grains, as we head out of the summer and into harvest season, the Soy complex has broken the recent move higher and Soy Oil in particular looks vulnerable to a substantial move lower (see this weeks Spotlight).
080307: Watch out for a potential bearish reversal in commodity prices as many world currencies have started to test their respective up trends against the Greenback. Interest rates around the world are falling as the equity bubble (that started almost exactly one year ago) is starting to unwind. Should equity weakness persist, demand for commodities in general could become weak in a market that has been dominated recently by M&A activity not fundamentals. For example, crude prices have hit upside objectives while Natural Gas, Heating Oil & Unleaded gas look to be heading lower. As well, most of the metals have not broken to new highs and look vulnerable for a rather large correction should recent support be tested in earnest. 
071307: The US Dollar Index has broken support and looks to be testing the lows from December, 2004 in earnest. New entry points have been registered in the Swiss Franc and Jap. Yen this week. Other markets of interest this week include Platinum & Lumber. In the former, platinum prices are challenging historic highs & in the later, Lumber has registered a new buy signal with a bullish flag pole breakout. 
042707: The US dollar continues to push to new lows and most notably against the Euro. There are signs that this move may be a little over extended as none of the metal markets nor the metal stocks have made new highs. While there is no bottom in sight on the greenback, any signs of strength should be respected in its current oversold condition. Similarly, world equity markets continue to push higher while we approach a seasonally questionable period. Of particular concern, interest rates are not helping stocks and Asian markets are mysteriously absent from the recent break to new highs. Extreme caution should be used over the coming months. Commodity prices in general remain contained as grains, softs, meats and metals work sideways to lower. Energy looks stronger. As well, many energy stocks look poised to move higher over the coming months as the year long consolidation seems to be coming to an end.   
042007: The US dollar index has broken its December '06 low as the British Pound has joined almost every currency in its run against the greenback. At the same time, bond markets around the world head lower on further indicated interest rate increases from a variety of countries. Add to that, almost every international equity market has exploded higher on little significant economic news. While the price action suggests being long this seems like a very high risk market heading into the seasonally weak spring quarter. Be long equities and the major currencies vs. the US dollar BUT BE CAREFUL.
041307: On the prospects for higher short term interest rates, many world bond markets (including Canada) have broken their long standing bull trends and are now projecting lower prices (higher long term rates) going forward. In what seems like a classic market 'trap', many of those who refinanced their mortgages when rates were low are now experiencing a dramatic increase in their monthly payments, as both 'teaser' rates expire and rates in general increase. One has to ask, will this squeeze be the final death blow to an already popped housing market bubble? And how will this affect (what seems to this analyst) a stock market that has a very hard time justifying the rally of the past nine months? 
033007: The US dollar index is testing the lows from December 1st, 2006 at 82.36 in earnest. Should this level be taken out it will signal yet another long term sell signal in the green-back. That is a big if and the markets will be watching the new US congress closely over the coming weeks to see if the Democratic led US government moves back to a 'pay-go' fiscal policy. Only time will tell...In other commodity markets, the grains suffered a set-back this week on the 'planting intentions' report released by the US Agriculture department Friday. US farmers currently intend to plant 12 million acres of corn more than was previously expected and as a result, prices were locked limit down for most of the day. Interesting to see Soy Meal put in a top and Wheat continue its move lower. Suggesting this is nothing more than a correction within a big bull market, Oats and Soy Oil remain strong and the recent rally in Pork bellies has reversed to the downside. One silent beneficiary, Cotton. Reports suggest acres now being planted with corn are coming directly at the expense of Cotton. Currently at the lower end of historic price range, Cotton is one market that has not participated in the commodities bull market that so many others have enjoyed. Maybe 2007-2008 will be Cotton's turn....
032307: The Canadian dollar has bottomed and now joins the Australian dollar in the bullish camp. The fact that the two 'commodity-currencies' are moving higher in tandem leads one to believe commodity prices in general shall remain strong and even move higher. To that end, crude oil has reversed its recent bearishness  (on rising mid-east tensions) and moved to new two month highs.
031607: Quiet week for trend reversals. Of note this week, the Australian dollar has broken to new contract highs on the anticipation of further short term interest rates hikes coming (note today's spotlight). In other markets, the grains continue to look 'toppy' (with their leader Oats hovering just below a key breakout at $1.80) and HG Copper has finally put in a short term bottom and looks like it wants to see $3.00/lb...
030907: While Continental-European currencies remain firm, the British Pound has broken down vs. the US dollar. Currently, it is too early to call an official reversal in the greenback, but the long standing bearish US dollar trend may be in the midst of a change. Silver has joined gold with a key reversal. Grains look to be consolidating for another leg higher as its leader, Oats, broke to new highs through the week.
030207: The massive world equity rally that began last August is now starting to be tested. What started as a effort to curb speculation within the Chinese stock market has spread to a sell off around the world (Hang Seng Index in spotlight). Yet few sell signals have been registered in what I might consider a healthy (albeit long overdue) correction for now. Of note this week, equity weakness coupled with energy strength has put a bottom in the Eurodollar futures after two years of relentless bearishness within the US short term interest rate market. On the idea of lower US short term interest rates, the greenback has weakened vs. the Japanese Yen in particular as the 'carry-trade' is being unwound heading into their year end. Since the B. Pound & Euro. don't really impress at the moment one is left to wonder what happens to the stealthly bullish US dollar at the end of March... Energy has firmed as the seasonal trade in unleaded gas lifts demand and any threat of a prolonged winter boost remaining demand for heating oil. The fall in world equity, the associated bottom in Eurodollars and the bottom in energy prices seem to have stopped metals price appreciation for now. While copper has been weak for some time now, gold itself has put in a rare 'outside-downside' key reversal on the weekly charts (helping bolster the idea the US dollar is stronger than it seems). 
In the foods markets, recent strength in grain prices may be coming to a short term end as their leading indicator (Oats) has broken a long standing bull trend and meat prices have firmed and indeed started to move higher.
020207: Most currencies remain weak relative to the US dollar in the short term. Bonds have turned lower led by British paper. Japan remains the only country to have a rising bond market but even that is coming into question. While the interest rate market looks mixed, international equity markets continue to boom higher as all major index's move to historic highs. Commodity prices are mixed with both bullish and bearish trends in effect. Of particular note this week, Orange Juice looks to be correcting the huge move higher seen over the past year.
010507: Happy New Year, and what a year it shall be...For the first review of the new year I have broken the markets into the two basic categories. 
Financials: Recently released hawkish Fed-Meeting-Minutes from the December FOMC meeting have put a small bottom in the US Dollar and solidified a top in both the S&P 500 and the Nasdaq 100. Coupled this with relatively strong job growth & rising hourly earnings and the market now expects further FOMC rate hikes, rather than cuts. Conversely, European currencies have broken down quite violently. The British Pound & The Euro have put in a double-tops and key-reversals all in the last week. Of particular note, British long term interest rates have confirmed a bearish flag pole suggesting one should expect higher borrowing costs out of the UK going forward. Back in North America, Canadian job creation exploded higher recently suggesting the BOC may need to start raising short term rates again. Unlike the greenback though, there is still no trade-able bottom in the loonie and unlike US equity indexes, Canadian stocks have yet to break down in earnest.
Commodities: On the heels of dramatically lower energy prices, commodity price inflation seems to be relenting. Historically warm winter weather across North America has removed the normal seasonal demand for energy products. As well, the 'anti-oil' political change within Washington D.C. has further pressured prices. This overt bearish sentiment has started to spill-over into other commodity sectors. Metal prices have broken and the soft & grain markets look toppy. With so much buying over the past few years, a period of sharp corrections (while painful) may be much needed.....of particular note, OJ looks very vulnerable. However, from a Monthly perspective (that is looking out a couple years), Cotton has formed a wide double bottom at very low historical levels. Pullbacks in Dec. Cotton should be considered buying opportunities.
121506: The established trends within the currency, bond & equity markets continue into the seasonally low volume year end. Of note this week in the agg market, grains look to be weakening while the meat complex looks firmer. While yet to actually turn higher, Cotton looks to be setting itself up for a run at the top of the past two year trading range. Should a breakout occur, monthly charts suggest a move back to 1.00 (over  time) wouldn't be too far fetched. 
120106: On weaker than expected economic data, the US dollar has broken to new lows against most European currencies. Similarly the Australian & Japanese currencies are in bullish trends as well. Interestingly, because more of internal tax policy than anything else, the Canadian dollar continues to move lower. The dollar index itself has registered a bearish flag pole formation with it looking like it wants to test the December, 2004 lows at or near 80.00. On those weak economic reports, bonds have broken out violently in North America, Germany and Japan suggesting the long awaited top in world interest rates seems to be here. In other markets, the energy market seems to have found support near the recent lows as cold weather hits the Northern Hemisphere in earnest. While silver continues to lead the metals, gold has registered a small bullish flag pole suggesting a test of the summer highs should be expected. For those trying to pick bottoms, keep an eye on Cocoa as the market seems to be finding good support in and around the 1400 area. 
112406: The US dollar is under attack from both Europe & Asia. This week alone saw a bull flag breakout in the Euro currency and bullish double bottoms in the Japanese Yen & Australian dollar. While the greenback itself hasn't broken down, its bullish tone of several months/weeks ago has receded for the time being. Further comments from central bankers regarding a move away from US dollar denominated reserves, coupled with generally bullish economic forecasts coming out of Europe has pushed Euro/US through 1.30 in earnest suggesting a test of the spring highs isn't too far away. A confirmation from the commodity currencies would further validate the breakout. While the Aussy currency looks strong, the Canadian dollar is still pointing lower. In the former's case, be long. In the later, be short (Due more to its Conservative Federal Governments recent reductions in taxes than the state of its economy).
111006: The Results from the US Congressional election are in and Mr. Bush Jr. (and his defacto energy policy) didn't do well. Taking both the House & Senate, the US Democratic party has taken control of the Congress and will now dictate policy going forward. This power shift has injected volatility into the markets and it may take several weeks for new trends to emerge. On comments from China's central bank about reserve assets, the US dollar has moved to the lower end of its recent trading range but has yet to breakdown. Of note this week, the British Pound has broken higher and Cocoa has put in a tight double bottom at the lower end of its recent trading range.
110306: Financial markets are waiting on Tuesday's US election results but some interesting price action can be seen. For instance, while crude looks to be trying to bottom, that cannot be said of the products. Both heating oil & unleaded gas have broken important lows from last year which suggests prices could fall substantially lower. Coffee was the only market to register a buy signal last week and looks even better at the close on Friday (see spotlight below). Grains continue to point higher as meat prices slowly erode.
102706: World currencies remain under pressure vs. the greenback while equities continue to point higher as we get closer to the US Congressional elections. The prospects of a 'lame-duck' US president have brought into question many of the trends of the past 6 years (see October Rational Investor for more). While the financials await that outcome, the grains continue their push higher & the meats remain under pressure. Coffee is the only commodity issuing a buy signal this week.
102106: Amid general global equity strength, European  index's stand out as having broken to new highs. Specifically, the British FTSE 100 has confirmed a weekly bullish flagpole formation suggesting one ought to be looking 5% higher. As well, German stocks look poised for an additional 6% gain as the DAX has too confirmed a weekly bullish flagpole. Energy prices remain weak as does the better part of the commodity board. While Gold remains bearish in the face of a rallying US dollar, industrial metals are looking better as Silver has put in a double bottom & Copper has broken its most recent sell pattern. Meats continue to trend lower as most of the grain market remains strong (with the beans playing catch-up).
101306: Equity markets are moving violently higher in unison. Is this the sign of a blow-off top? The correction in Energy prices looks to be almost done. On a longer term basis, crude is no longer overbought and may resume its march high should supplies of distillates become scarce or geopolitical tensions rise again. Recent bearish action in the Cdn. dollar and many European currencies is helping the US dollar index on its march towards its upside 50% rule target. But what then? The upcoming US congressional elections (Nov 8th) could mark both the top in equity & fixed income markets riding on the back of a falling commodity market and a strong US dollar. In other markets, the grains have moved violently higher due to unseasonably cold weather throughout the US bread-basket & on poor planting news from south of the equator. Corn, Wheat & Oats have all broken to new contract highs and have reluctantly pulled Soy out of its slump. All this action suggests the late summer bear-slide has ended. On the flip side, the meat markets have ceased rising and (in Feeder cattle's case) have presented respectable short entry trades.
082506: European currencies look to be pushing higher vs. the green-back while the yen continues its recent slide. German bonds now join the bullish camp as interest rates around the world fall on weaker energy markets. This is adding further support to recent equity strength.
081806: Little change in currencies & interest rates but alot of change elsewhere. A double top breakdown in crude oil has sent most equity markets moving higher in earnest and put in a top in gold. Tests of the spring highs in most equities should be expected heading into the Labour day holiday.
080406: The British Pound and now the Euro look very strong against the US dollar. S&P 500 now joins the Dow, TSX and London within the bullish camp, however seasonalities do not support a sustained move higher. Silver is the only metal to breakout higher & Heating Oil has joined all the energies now with a bullish breakout of its own. Seasonalities should support heating oil's move higher and the recent heat-waves covering much of eastern North America have put a bottom in the Natural Gas market. Finally of note this week, coffee has reversed its recent bearishness to put in and confirmed a bottom.
063006: Currencies, bonds and stocks remain in their current trading ranges. Metals in general have bottomed in the short term and look to be testing the highs from the spring. Crude Oil remains persistently strong with Unleaded Gas moving to new highs over the past week. However, Natural Gas has broken recent support & Heating Oil remains within its bearish formation. Cocoa has broken the top of its 6 month channel with a move through resistance at 1566. Soy Oil has broken higher while Soybeans and Soymeal have tested their lows and turned higher. Meats have yet to top in earnest so look for the grains to remain subdued for the time being.
062306: The US treasury market has broken to new lows while the rest of the world's bonds have not. Heating oil has broken down as commodity prices in general are weaker with the exception being oj & the meats.
061606: The US dollar continues its rally vs. its European counterparts. Canadian dollar has yet to breakdown but looking toppy. While tempting to believe, interest rates are slowly trying to top while the major stock indexes work through a healthy correction. Gold is now the only metal without a sell patterns working. Energies remain persistently strong with Natural Gas breaking its recent sell pattern. Watch stops closely as both the crude & the products are still substantially above long term trend lines.  The meats have moved as anticipated showing big gains of late as Cotton, Soybeans, Soymeal and Cboe Wheat look to be setting up good entry points on daily buy signals going forward....
061006: Tough talk on inflation (and the prospects for higher short term interest rates) has put a bottom in the US$ index & bearish reversals in the Euro and S. Franc!
060306: The Canadian dollar is the only currency that has broken out higher vs. the greenback this week. Copper & Silver prices have broken down suggesting the metal bull market may be nearing an end after almost all upside targets hit; watch Palladium for near-term signal. Cotton, Soybeans & Soymeal all have confirmed bottom formations and long positions should be initiated heading into the summer growing season. Hogs have confirmed a sharp bull-flag formation and suggesting a quick move of $.15 ($6000/contract)....    
---Nine month leave---
090205: The US dollar is now in free-fall as the effects of Hurricane Katrina take the 'wind' out of the US economy's sails (gold bugs take note!). The fixed income markets are starting to price in short term rate stability & even the thought of decreases. Oil has almost hit the listed target of $71.60 while 'the products' have far surpassed upside objectives. This really has been a 'products' story though as refinery capacity has been the issue for some time now; not the supply of crude itself. A significant long term technical breakout has occurred in Natural Gas. The highs from Dec 2000 ($10.10) and Feb 2003 ($10.10) have been violated rather impressively with Aug 2005 close at $11.46. This is wonderful news for energy bulls but is a significantly bearish event for the economy in general. The biggest beneficiary in the short term and for what looks like the foreseeable future seems to be Canada. The currency looks poised for a significant technical break out, the bonds have already broken out higher and the commodity laden equity markets are pointing substantially higher too. Oh, Canada! On a final note, the grain markets look 'toppy' as we head into the fall harvest. Not surprisingly, the meats look to be establishing bottoms going forward too, as the seasonal shift may be underway. 
081905: On an encouraging T-I-C report released Monday, the US dollar has enjoyed a brief counter trend rally as bonds have risen in price (lower yields). Merck's legal woes have capped a week where the Dow now has a double top working. This suggests the seasonal rally in equities may be at or near an end. Many soft commodities are pointing lower. Of particular interest, coffee has a confirmed bear flag working suggesting prices may fall appreciably in the not too distant future.
081205: The Jap Yen has joined almost every major currency moving higher vs. the US dollar. As well, Japanese bonds have broken violently lower and the Nikkei has broken out higher. Something big is brewing in Asia! International investors have seen this and broken gold out of the nine month sideways channel. Energy markets continue their bull moves with strong momentum but upside targets have now been hit in Unleaded & Natural gas. Favorable ending-crop conditions in the southern hemisphere and improving growing conditions in the northern have turned many food/fiber prices lower. Couple this with potential bottoms in many of the meats and a potential harvest sell-off may be beginning a little early this year. 
080505: After a month off for summer vacation, I'm back and looks like just in time for some major capital shifts. Firstly, the Greenback rally from last winter has run out of steam and has put in a top vs. many European currencies and close to one vs. the Yen. Along with that, interest rate markets have reversed their bullish stance from earlier in the summer. Japan, Canadian, Australian, German, UK and US bonds are all pointing lower so look for higher rates to come. 
070805: Tends in Currencies and interest rates continue same pattern but Australian equities have now turned lower on failing Australian dollar. While Natural gas remains range bound, Unleaded has finally joined Crude & H. Oil in the bullish camp. Orange juice is breaking out higher on seasonal hurricane fears and Cocoa has failed on renewed peace talks in The Ivory Coast. Meats look washed out as Pork Bellies have fallen more than 40% in the past four months.
070105: Interest rates look toppy as latest bull run seems to be running out of steam. Heating Oil has broken out higher and now joins Crude in the Bull camp. Metal prices look weak as US Dollar continues higher. Specifically, Silver has put in a quick double top and is threatening to confirm a monthly double top with a move below $6.77.
062405: Bond prices have reversed the daily top patterns as the world begins to believe short rates have been too high for some time. (our euro-dollar trend is now over 60 weeks old!). The effects of these higher short term rates and higher energy costs have taken a toll on the economy. In particular, the bearish trend seen earlier this year has re-exerted itself within the technology sector. Since the tech rally was off a 'V' bottom, price action could easily take this index to new lows. Housing may be suspect too with Copper prices finally hitting the huge upside target at $1.70/pound and lumber prices breaking down in earnest. Grain prices are moving higher into the key pollination period while meat prices resume their downward moves on the latest Mad-Cow scare. The softs offer both long and short ideas as Coffee moves in earnest lower while Cocoa Sugar, Cotton and OJ look to be pointing higher. Looking at the energies more closely, crude oil itself is the only market to have broken to new highs so far but heating oil looks to be setting itself up for a potentially violent move higher. Should this breakout occur (as I fear the market expects) one should expect some extreme market volatility in the weeks ahead.
061705: Multiple breakouts in equity index's riding on further strength in bonds (lower interest rates). Crude Oil has rallied to the top of the recent trading range but hasn't broken out cleanly to new highs. Cocoa has broken out higher with a potentially substaintial move ahead.
061005: The Euro has hit down side targets as the US dollar continues its relentless rise. 
060305: Multiple targets hit in the currencies ( including the Swiss Franc, Japanesse Yen and the US dollar Index). After hitting its downside objective, Gold has put in a bullish key reversal, Silver is flirting with a breakout and High Grade Copper has violently broken out higher. Suggesting a global economic slowdown is indeed apon us US 10 year interest rates have broken a long standing bearish formation in the face of violently higher global bond prices.
052705: Commodities continue to correct as the US dollar continues to point higher. {Looking at a monthly chart, a 50% retracement of the most recent Greenback slide suggests an upside target at or near the 100 level (121.09 from July, 2001 + .8048 from December, 2004 / 2). While one should continue to look for the Greenback to test the .8100 level again, this study suggests that if indeed this is an intermediate bottom in the US Dollar, there is alot of room for it to move higher}. Looking elsewhere, while S&P & Dow buy signals continue to point to higher prices, new developments this week include German stocks reversing violently higher (both taking out stops and forming a massive bull-flag formation) and the commodity index's in Canadian & Australian putting in bottoms at their recent stop levels. Interest rates have broken the top in the US while Canadian, German and British bonds continue their respective moves higher. 
052005: This past week has seen the US dollar continue its assault higher as all major trading partners' currencies and all the metals are correcting vs. the greenback. Commodity prices in general have topped and as a result US industrials have bottomed and have registered buy signals (S&P 500 & Dow). While no outright buy signal, the Nasdaq and most international equity index's are testing the respective stop levels on the current short trade.
051305: The US dollar has broken out of its five month consolidation as Canada and UK join German and Japanese bonds with breakouts higher in price (lower interest rate). Both the metals and the energies are pointing lower as do most equity index's. As the Nasdaq is the only index to have hit its downside objective, look for economically insensitive sectors (ie. tech. & biotech) to outperform as bond prices and the US dollar move higher.
050605: The greenback looks strong coming out of the April employment report while the metals and many currencies look weak. US short term interest rates look to be moving higher on the potentially inflationary data even though many commodity prices look to have topped. Long term interest rates seem to be confirming this divergence and look to be heading lower. US Federal tax receipts are coming in much higher than expected and the Treasury announced plans to reissue 30 year bonds. For very different reasons, Japan & German bonds have broken-out higher too. Uncertainty over the upcoming Euro-referendums and a potential revaluation of the Chinese currency have capped short term growth prospects in these rejoins. From an equity perspective, recent economic uncertainty has not only driven prices down but also broken many long standing uptrend lines. A summer rally may take the markets higher in the short term, but ultimately they will need some time to correct the current bearish technical picture. 
042905: Crude has broken down under the weight of massive inventory builds. Global demand is waining and the potential bottoms in many commodities have unfortunately resolved themselves bearishly. Confirming this, Japanese bonds have broken out higher suggesting Asia is indeed economically weak. To further this idea, equity markets across the world are working themselves lower. As equities are the true-est of leading indicators, US Federal reserve policy has indeed slowed economic growth, the question now is how deep will this soft patch be. Under bearish commodity weight and internal fiscal and monetary conditions, the Canadian dollar has broken down in earnest and is the focus of this week's spotlight.
042205: The market is currently deciding if the old trends are still valid or if new ones need to be established. As a result, very sharp price swings can be expected. BE CAREFULL! World currencies are surging against the US dollar as inflation fears ease. Potential bottoms in many commodities as international demand remains strong. The commodity currencies are confirming this as the Australian dollar has put in new weekly buy signal and the Canadian dollar held key support at .8005. Bearish equity stance indeed correct {Target almost hit on Nasdaq 100 (low 1409/ target 1406)} as European equities look especially vulnerable. 
041505:European, Asian, Canadian & Australian dollars on the verge of huge breakdown as commodities and interest rates differentials correct in earnest. Canadian & Australian equity index's are leading entire equity market lower as well, very rare indeed! Is this a harbenger of ill things to come or the climactic end of a bear move? Regardless, the model suggests extream bearish exposure through either direct short sales or put option purchases.
040805: Energy market weakness has registered sell signals in the products markets and almost a key reversal in Crude Oil itself. US short term interest rates continue pushing higher and yet Copper has registered a new contract high. As well, European currencies have tested bottoms or recent trading ranges and held. Look for US dollar equitiy and bond market weekness in the absence of new economic data for the coming week.
040105: A stunning move higher in unleaded gas enabled the market to hit what I considered to be a very aggresive upside target. To that end, energies in general are all pointing higher after a brief correction with heating oil registering a monthly breakout to new highs. While the commodity-equity markets (Canada & Australia specifically) have not confirmed the move, thier currencies have performed far better than the Euro & Yen vs. the greenback. Being the first week of a new quarter, pay special attention to the price action over the next week or two.
032405: Big reversals in commodity-equity markets (in Canada; double top & in Australia; key-reversal). Since weakness in equities often leads their underlying commodity prices lower, the recent rally in the greenback and now the top in commodity-stock-proxies suggests a bear trap may be looming in spot commodity prices. The market is accepting an underlying belief in a stronger US dollar (and higher US short-term interest rates). In the light of the recent uncertainty regarding the Euro-Currency (and the zone's apparent economic weekness) and Japanesse bonds extending last weeks bullish key-reversal and one shouldn't be surprised to see the greenback move higher & commodities move lower in the coming weeks. 
031805: Potential reversal in US dollar/Euro on daily charts may take us back to other end of trading ranges. Japanesse bonds have registered a weekly bullish key reversal and have put in question the dramatic breakout seen last week in the Yen. Bonds in general may see higher prices due to equity weakness (US tech-stocks have confirmed the potential bear-flag & the Dow has broken its up-trend from the August lows). This bearish price action can be directly blamed on energy prices continuing to point higher. However, this latest move higher in the energies looks vulnerable due to a bearish divergance in momentum. Use any energy weakness as a buying opportunity & any stock market strength as a shorting opportunity. (notice I have left stops in the energies at previous levels). Finally, while a pullback wouldn't be out of the question on a rally in the US Dollar; Gold, Silver, Palladium and HG Copper are still working bullish chart patterns. And now, Platinum has broken its long stanging Narrow-Sideways-Channel by closing above the $888 level.
031105: Canadian dollar & Jap. Yen join Aust. Dollar with respective buy signals this week vs. US Dollar while european currencies remain range bound vs. the greenback. German bonds join an almost universal rising interest rate market & of most significance, US Treasuries where hit hard on Japanese reserve diversification remarks. High Grade Copper remains within up-trend but getting very old. Should interest rates effect the US housing bull-market related commodities may come under pressure. 
030405: Unleaded gas hits upside target & breaks to historic highs. Monthly charts suggest a target near $1.72/gallon. The surge in energy prices has weighed heavily on tech. stocks and bonds while most major equities continue their respective moves higher. Bold breakout in Palladium (see TTA 030405). 
022505: XMD, XLB, Canadian stock index's move towards target on bullish commodity equities. British bonds continue slide as UK economy regains traction, move stop on long FTSE-100 positions up to past week's lows. Crude Oil pushed higher on double bottom breakout in Heating Oil & Natural Gas.
021805: Copper posted a new double bottom close line buy signal & Silver confirms last week's reversal with push higher. Potential shift in world interest rate picture as US treasuries turn lower on Jan. PPI data reported up .8% (biggest increase in 6 years). US stock index's look vulnerable but Canadian & British stocks continue their respective moves higher. Australian currency continues to look bullish too.
021105: Impressive reversal in silver to both break bearish flag-pole and register new buy point. Bearish flag-pole in British Pound, while bullish flag-pole in Gilt. Bullish breakout to new highs and confirmation of flag-pole in Canadian equities. Potential for Weekly Bullish Flag-pole in Aust. Dollar. Recommend purchase June .8200 Calls at 1.10 or better (risk to .55).
020405: Candian dollar has broken down and looks to be targeting .7882 area & Gold/ Silver still testing lower. 
012804: No new trends as US dollar continues counter-trend rally. US short-term interest rates, Australian equity index's and High Grade Copper look over extended.
012104: US dollar moves into third week of counter-trend rally, and the Japanesse Yen has hit up-side target and traded to a new 52 week high as well. German & Japanesse bonds are breaking to new highs as fixed income instruments continue to be strong. US tech stocks confirm bear-flag as many Equity index's move lower in unison.  Curiously, gold and silver are still seeking a bottom while platinum is testing the upper end of its trading range and palladium has a confirmed double bottom. Finanlly, energies are mixed with a confimed double bottom in Crude and Unleaded Gas yet bearish chart patterns in Heating Oil and Natural Gas.
011405: Weekly double bottom in Crude Oil on run-up to Iraq election. Candian dollar double bottom on energy bottom too. Potential entry point on Aust. dollar as Jap Yen breaking higher. Nasdaq 100 confirmed key reversal with move lower this week.
010705: Alot has happened in the world this first week of the quarter and the new year. Tsunami concerns dominate Asia currently but should bennift local reconstruction orieted companies. Germany is in the process of introducting dramatic changes to its social safety net (as of January 1st, 2005). German bonds suggest further economic weakness there while these measures work their way through the economy. As well, data suggests a relativly more attractive equity investment environment within North America and Asia. As a result, there is now a solid bottom in the US Dollar, a top in gold, and many corrections underway throughout the worlds asset markets. While most equities markets moved to higher ground early, a Weekly key-reversal has been established in the Nasdaq 100 suggesting the 2004 Tax incentives put forth by George Bush have indeed borrowed purchase orders from the coming quarters. 2005 may look very similar to 2000 for high tech stocks.  
010405: Happy-NewYears! 
122404: Merry Christmas to all, there will be no update this week due to the holidays.
121704: Recent rally in US dollar (on stronger current account data) has corrected some of the excesses built into many of the markets but has not broken any underlying trends. Platinum/palladium spread continues to work in our favor. 
121004: The 'carry-trade' (long Euro bonds/ short US bonds) is starting to be unwound in earnest. As a result, the long awaited correction in the US Dollar has come. While no trends have been broken, stops on long currecy positions (vs. US Dollar) are being hit. Similarly, precious metal prices are correcting with the strength in the greenback. The trend in gold matches that of the US dollar and remains intact but Silver has failed at the $8.00 level and is now within a well defined chanel between $5.00 and $8.00. The Platinum/Palladium spread continues to work in Platinum's favor but Platinum broke down and is now trending lower with Paladium. Crude Oil continues to move towards my $40/barrel target and now Unleaded Gas has broken down from a long sideways chanel suggesting much lower prices at the pump ahead. Equities have not broken down and look to be consolidating at the mid point of a massive bull move.
120304: Yet another new low on the US dollar index on the heels of the weaker than expected Nov. employment report. US Treasuries are diverging from pier group because of their weak currency, this is a very dangerous situation for US fixed income assets. At the same time, Dow 30 has joined other bullish equity markets as crude oil is now well within Bear Flag formation and working towards $40.00 target. Weekly British Pound breakout completing Monthly Inverted head & shoulders patterns (refer to TTA 12/03). Platinum/Palladium spread moves in favor of platinum with new Bear-Flag in palladium and bullish channel breakout in platinum.
112604: Metal prices and international currencies continue trends higher as US dollar continues to come under relentless preasure. Aussie bonds reverse sell signal and break to new highs.
111904: Trends in currencies continue as Greenspan warns trade & current account deficits in US are unsustainable. Upside target finaly hit on US short term interest rates as November LEI reported down in US 5th straight month in a row suggesting latest rally in US equities might be short-lived.
111204: A virtual 'melt-up' in US equities (S&P 500!) as they play catch-up to the rest of the world. US treasuries continue to move lower on strong economic data, good corporate earnings and seasonality. As well, Australian bonds have rolled over too.
110504: On Bush re-election US stocks break violently higher & US dollar/bonds break lower (market now expects more tax reform & further US dollar dillution). Every major currency is moving higher vs. the US dollar and gold broke it's winter highs at $432 to close Friday at $434.60. (refer to Technical Trading Alert 11/05/04).
102904: Most energy prices have hit upside targets and put in short term sell signals with Key Reversals in Crude Oil & Heating Oil and a potential Island top in Natural gas. As expected, technology stocks begin to outperform on energy weakness; Tundra Semiconductor (TUN:TSE) for example currently has a solid weekly bottom in place with good upside potential.  Most currencies have confirmed weakness in US dollar. If election results take weeks to determine the US dollar could come under significant attack.
102204: Natural gas has joined Unleaded gas and Crude oil in the bullish camp as energy related products continue their relentless move higher. While heating oil seems overbought and seasonaly suspect, unleaded's bottom could be a good entry point for next year's summer driving season. Because of this and other fundamental issues, US stocks have exerted enough downside pressure to temporarily halt what seemed like a general move higher in world equities. Upside target hit on Aust. stocks. One Canslim stock, TSRA (recommeded 09/04), dramatically outperformed recently on yet another upside earnings release.  British Pound put in bottom and now joins S. Franc, Euro, J. Yen, Cdn$ and Aus$ in up-moves versus the US$.
101504: Bull moves in S. Franc and J. Yen (powerful looking coil) join Aust. and Canadian dollar with buy signals. Equities generaly look bullish (notable exception Dow Jones Industrials as a new insurance scandal has added to an already unhappy market). Bull flag targets hit on Heating Oil & $.25 away on Crude (watch for a seasonal trap as momentum divergances continue to grow). Metals have corrected from a violent move higher but still remain within bull moves...
101104: Happy Thanks-giving Canada....
100804: Australian & Canadian dollars both register buy signals. Japan and Germany join British, Australian and Canadian stocks in respective uptrends. Pharmaceutical and Financial scandals coupled with a tight presidential race prevent the Dow from breaking out even though the S&P and Nasdaq look short-term bullish. 
100104: British stocks & bonds continue their move higher leading Nasdaq and the S&P 500 out of their bear trends. No top in energies yet. High grade copper has big breakout confirming similar move in the Basic Materials ETF; XLB. The Canadian dollar moves to 11 year highs vs. US dollar as is helped by rising commodity prices and internal fiscal dicipline. 
092504: Huge Breakout in british stocks as gilts lead market higher, Weekly Bull Flag target 5641 or roughly 30% higher!!!
091704: BRIAN ACTIVE!!!
091504: Final long position liquidated as prices moved through stop at 1421.96
091404: Initial position liquidated as prices move through 6 SMA at 1430.
091104: Weekly summary reviels interesting results. British bonds still dlook very attractive.....
091004: Buy stops hit on Nasdaq QQQ's at $35.10. Inverted Head & Shoulders across many equity markets. Buy signal on move above $35.04 on QQQs and 1401.95 on NDX.
090804: Greenspan speak, market rolling over, BOC raised rates, Cdn $ rally into news but no breakout. 
090704: Nasdaq still unable to regain footing after INTC news.
090304: Nasdaq failed breakout on INTC mid-quarter downward revision in revenue expectations (SOX down 5.5% on day). 
090104: Stocks getting holiday bounce. Breakout on Dow, S&P but current stop held on Nasdaq near 1415 area.
083104: Swing trader gap on QQQ at $32.40 look for it to be filled.
082304: Downtrends in Stocks still in place, latest rally has relieved some of the oversold condition but no bottom yet.
082304: Weekly update shows interesting market action. interest rates falling in British (big trade potential) and Cdn. bonds. Still waiting for move out of channel in S. Franc. 
081904: Stock rally running out of steam, 15 min dtop across many markets, bottom looks solid but will be tested soon
081404: Stocks looking for bottom and oversold
072204: Weekly tops still in place on Major US index's. Daily RSI nearing oversold, look to sell into rallies. Vix has yet to break 17. Tight bot forming?

Market	Symbol	Trend U/D	As of	# wks.	Position	Price	Stop	Target	Comment
Currencies
US dollar index	DXY	D	02/29/08	10	Short	74.80	73.20	70.60	Bear flag; (82.10-74.80)-77.90.
Cdn. dollar	CDY	SCh	11/16/07	25	NP	1.0293	.9688	--	Trade break of channel.
British Pound	BPY	D	12/07/07	22	Stop hit	2.0431	1.9940	Tgt hit	50% Rule; (1.9208+2.1112)/2.
Euro.	ECY	U	01/18/08	16	Long	1.4882	1.5369	Tgt hit	Bull flag; (1.4882-1.3398)+1.4323.
Swiss Franc	SFY	D	04/24/08	02	Short	.9768	1.0113	.90785	50% rule; (1.0185+.7972)/2.
Jap. Yen	JYY	U	11/09/07	26	Stop hit	8919	9723	9205	50% rule; (10352 + 8059)/2.
Australian dollar	ADY	U	02/01/08	14	Long	.8995	.8957	1.0147	Bull flag; (.9383-.7793)+ .8557.
Interest rates (U means up in price, down in yield / D means down in price, up in yield)
Euro-dollars	QED1!	U	10/19/07	28	Long	94.94	96.93	Tgt hit	Bull flag; (94.94-94.31)+94.75.
US 10-YR Note	QTY1!	U	07/20/07	41	Stop hit	106'01	115'03	122'24	Bull flag; (119'05-111'16)+115'03.
GOC 10-YR	WCB	U	07/27/07	41	Long	111.17	116.75	120.90	Range Breakout; (114.93-108.96)+114.93.
Long Gilt	LGL	D	04/18/08	03	Short	108.34	112.08	107.73	50% rule; (112.57+102.90)/2.
Ger. Bund	DGB	D	04/18/08	03	Short	113.93	116.13	114.07	50% rule; (118.48+109.66)/2.
Jap. 10-YR Bond	SJG	U	07/20/07	40	Stop hit	132.03	137.10	Tgt hit	Bull flag; (136.40+131.00)+134.30.
Australian 10 yr.	ASX	D	11/03/07	27	Stop hit	93.68	93.95	93.42	Bear flag; (94.21-93.68)-93.95.
Stock Indicies
Dow 30	INDU	U	04/18/08	03	Long	12767.7	11731.6	12916.4	50% rule; (14198+11634.8)/2.
Nasdaq 100	NQY	D	01/04/08	17	Stop hit	1982	1879	Tgt hit	50% rule; (2265-1705)+1814.
S&P 500	ESY	D	11/09/07	25	Stop hit	1492	1400	Tgt hit	50% rule; (1587+1253)/2.
S&P/TSX 60	WSX	U	04/11/07	04	Long	817.20	732.00	853.00	Testing high fr 11/02/07.
FTSE-100	LFTY	U	04/18/08	03	Long	6090	5410	6802	Testing high fr 10/19/07.
German DAX	DAXY	D	03/14/08	08	Stop hit	6381	7108	5156	Bear flag; (8253-6301)-7108.
Nikkei	SNIY	D	03/14/08	08	Stop hit	12450	14050	10370	Bear flag; (16130-12450)-14050.
SPI Aust.	APIY	D	12/21/07	20	Short	6335	5759	Tgt hit	50% rule; (6815+5584)/2.
Metals
Gold	%GC	U	09/07/07	34	Stop hit	684.20	918	Tgt hit	Bull flag; (692.50-560.50)+640.
Silver	%SI	U	10/12/07	29	Stop hit	13.82	19.34	Tgt hit	Bull flag; (13.82-11.46)+13.20.
HG Copper	%HG	U	02/08/08	12	Long	3.331	3.858	4.662	Bull flag; (4.016-2.85)+3.496.
Platinum	%PL	U	09/28/07	32	Stop hit	1349.6	2016.7	Tgt hit	Range brkout; (1347-1059.60)+1347.
Palladium	%PA	D	05/02/08	01	Short	435.10	475.50	325.35	Bear flag; (585.25-435.10)-475.50.
Energies
Crude Oil	%CL	U	09/14/07	33	Long	78.80	98.60	124.30	Bull flag; (111.80-86.10)+98.60.
Heating Oil	%HO	U	09/07/07	34	Long	2.143	2.849	Tgt hit	Trading range breakout.
Unleaded Gas	%HU	U	09/21/07	33	Long	2.111	1.945	Tgt hit	Cup & Handle;(2.455-1.336)+1.84.
Natural Gas	%NG	U	02/15/08	11	Long	8.48	8.66	Tgt hit	Bull flag; (8.71-5.19)+6.84.
Softs
Coffee	%KC	U	08/10/07	39	Stop hit	118.40	144.85	Tgt hit	Bull flag; (129.80-93.50)+100.40.
Orange Juice	%JO	D	02/08/08	13	Short	130.40	152.00	68.30	Bear flag; (210.00-117.50)-160.80.
Cocoa	%CC	U	07/12/07	22	Long	2002	2217	Tgt hit	Bull flag; (2143+1566)+1763.
Sugar #11	%SB	D	05/02/08	01	Short	11.25	12.94	9.12	Bear flag; (15.07-11.25)-12.94.
Cotton	%CT	D	05/02/08	01	Short	67.31	78.95	54.88	Bear flag; (91.38-67.31)-78.95.
Lumber	%LB	D	01/11/08	17	Stop hit	223.50	235.10	180.30	Bear flag; (312.3-223.5)-269.1.
Grains
Soybeans	%S	U	09/14/07	34	Stop hit	915	1341	Tgt hit	Bull flag; (1017.5-789)+923.
Soy Meal	%SM	U	08/31/07	36	Stop hit	236.00	337.9	Tgt hit	Bull flag; (254.00-190.80)+211.50.
Soy Oil	%BO	U	09/14/07	34	Stop hit	38.07	60.25	Tgt hit	Bull flag; (39.87-33.93)+37.55.
Wheat	%W	D	03/21/08	07	Short	1050	1295	Tgt hit	50% rule; (1300+412)/2.
Corn	%C	U	09/21/07	33	Long	354.50	569.50	Tgt hit	Range Breakout; (437-308.5)+437.
Oats	%O	U	09/14/07	34	Long	268.00	334.00	437.00	Testing high fr 03/07/08.
Meats
Live Cattle	%LC	D	10/05/07	31	Short	94.475	94.10	85.05	Testing low fr 06/29/07.
Feeder Cattle	%FC	U	04/25/08	02	Long	106.50	97.30	119.80	Testing high fr 090707.
Lean Hogs	%LH	U	02/15/08	12	Long	60.70	54.50	76.98	Testing high fr 06/15/07.
Pork Bellies	%PB	D	03/30/07	58	Stop hit	100.25	92.80	Tgt hit	50% rule; (108.40+.74)/2.

Open Technician's Mini-Manual for help with terms and definitions

Spotlight

May 02, 2008

Spotlight: Cotton

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