Monday Commentary and Trading Levels

Good Morning Traders

Last week Monday, equity index futures opened at or above their respective R1's. It held those levels and had a modest rally to set the tone for the week ahead of last Friday's Unemployment report.

Monday's trading action was the "follow through" day equities were looking for, following Friday's rally, that confirmed the uptrend. Volume increased throughout the week however easing Thursday as we waited for the report. Unemployment was much better than expected. Job losses amounted to 36,000 vs the 68,000 anaylsts' were expecting. The feeling that employment is stabilizing let the horses out of the gates and stocks were running. We ended the well above last week's Weekly Numbers.

Summary

We are in a confirmed uptrend. However, we are well overbought on many technical indicators. We could continue higher however due to the extreme overbought signals I'm getting, buy with caution. Use stops and consider protective puts if you hold overnight.

Equities

As I write this, equity index futures are trading modestly higher. A look at my Weekly numbers below, you'll notice that index futures are trading well above their respective R2. I see a little but more upside of each this morning - ES H10 could trade to 1041/42 and TF H10 could trade to 669/670 before finding resistance. This could be a good area to short.

Energies

QM J10 seems to be running along with equities. I imagine the opinion is that as the global economy improves, demand for crude oil will grow accordingly. Rising oil prices, and in turn rising gas prices at the pump, will certainly retard any economic recovery in the US. Those of you that believe gold is the best long term investment due to hyper inflation fears, you should know that oil prices act as a counter measure to inflation. Rising oil prices is an indirect tax that will curtail spending. We've already seen this happen in 2008. Keep this in mind next time someone tells you gold is going to $3000.00 an ounce.

QG J10 is still getting hit. This market is in a downtrend with very little signs of reversing. It is very much oversold but the reversal trade is not apparent.

Trading Levels - Monday's and Weekly

If you have questions or comments regarding any of my information, please contact me directly via email at ruria@manducatrading.com or toll free at 866.312.4965.

Happy Trading - Rob

Good Morning Traders

Welcome back to a new week and a new month.

We ended the week on a positive note relative to my numbers. TF H10 and ES H10 closed at or above their respective R1 - TF H10 682.80 (R1 628.61) and ES H10 1105.25 (R1 1105.52). The mini NAS future also closed slightly above its R1 while the mini Dow closed we below.

However, last week's action as well as most of last month's action was on light volume. Equities are still in a correction as a result, despite some nice trading days. What needs to be seen is a strong intraday rally on good volume  that is followed up by a similar or stronger rally. At that point this correction will be over. Until then you need to question the types of rallies that we've been seeing in equities as of late.

Economic News

January Personal Income rose 0.1% vs 0.4% expected. Personal Consumption was up 0.5% vs 0.4% expected. So we're spending more than we make - not good. Americans are either using credit or tapping into savings.

ISM Manufacturing Index and Construction Spending due out  at 10:00 EST.

Energies

I'm not going to get in front of this bus but I am looking for a buy point on QG J10. This selling is overdone however the trade is bearish and giving no signs of turning. QM J10 is trading $80.175, +0.525. This morning's rally in DX H10 is neither hurting equities nor commodities. I think QM J10 is up more on geopolitical tension more than anything else.

Trading Levels for Today and the Week

If you have questions about my commentary or the levels below, please contact me directly via ruria@manducatrading.com or toll free at 866.312.4965.

Happy Trading! - Rob

Good morning

It looks like a quiet open following yesterday's whipsaw in equities. Out this morning, Durable Good orders were up 3.0% vs 1.5% expectations. Ex-transport it was down 0.6% while expectations were for a gain of 1.0%. This isn't a good number.

ES H10 and TF H10 are both up about 1.00. Not surprisingly, DX H10 is also flat. This week has been volatile. Yesterday's reversal coincided with a intraday fall in DX H10. It's tough to say what will happen today. I wouldn't expect much one way or another however, I still feel there is greater downside risk than up. The move yesterday isn't such a surprise considering it comes at the end of the month where money managers usually pad stats for monthly statements. If true, that's great information but it doesn't help when trying to "ride" a trade. These markets are for the quick and nimble.

Trading Levels

Good Morning Traders

Looks like we didn't get the follow through from Tuesday's Tank yesterday. Instead, equities rallied after paring an early loss. They traded more like the Thursday scenario I noted yesterday than Wednesday's.

Yesterday I also wrote:

They're striking and rioting in Greece as a negative response to their government's attempts to fix their economy. If this situation escalates, and I'm sure it will, the Euro may get hit pushing the Dollar higher. This will put pressure on already sensitive equities. (Pivot for Profits, 2/24/10)

As I write this, ES H10 and TF H10 are down 14.50 and 6.60 respectively. Why? The mess in Europe sparked selling there and in Asia. I'm also reading that investors may be concerned that India's new budget will contain measure to ease growth, through taxes or just less stimulus. These concerns are bidding the Dollar and in turn, hitting equities. DX H10 is $81.13, +0.215.

Also, look for tech to get whacked. PALM was downgraded by 3 firms over earnings concerns. This should hit RIMM which is 1 of the Big 3 that moves the NASDAQ.

On the Economy ...

Durable Goods came out better than expected with at rise of 3.0% vs 1.3%. Jobless Claims rose more than expected to 496K vs 460K. Jobs will be the focus here. The economy is stagnant at best.

Energies

QM J10 rallied yesterday. In that respect, I was wrong. However I identified an end to the upward trend. Given Dollar strength today, we're seeing that continue to develop. I see this market falling back to the $75.00 before finding bids. QG J10 reversed a bit yesterday but also under pressure this morning. Inventories are out at 10:30 EST.

Trading Levels

I got short the R2k yesterday near the close based on the fact all the indexes related to the Russell 2K fell below their weekly R1. We'll see how this works out but I have a target near 600 on TF H10.

If you have questions or comments please contact me directly via email at ruria@manducatrading.com or toll free at 866.312.4965.

Happy Trading! - Rob

Good Morning Traders

It looks like another beautiful cold and sun-less day in Chicago. Fresh snow on the ground and more on its way ... Joy!

Out this morning ...

MBA Purchase Apps fell 7.3% while refi's fell 8.9%, another weekly decline. Due out later this morning, New Home Sales at 10 EST. This report will be released just as Fed Chair Bernanke discusses the economy and perhaps reveals the Fed's plan to pull some money off the table. Crude oil inventories out at 10:30EST.

Equities

So what follows the Tuesday Tank? Usually we'll have a follow through day on Wednesday, early weakness then late day upside reversal Thursday, ending with a flat to higher Friday. Does this always happen? No but time will tell if this happens this time.

As I write this equity index futures are trading flat to positive. TF H10 and ES H10 are trading 625.60, -0.20 and 1096.75, -0.50. They have been weakening all morning leading to the open. The key here is DX H10 which is currently at $80.85, unchanged. They're striking and rioting in Greece as a negative response to their government's attempts to fix their economy. If this situation escalates, and I'm sure it will, the Euro may get hit pushing the Dollar higher. This will put pressure on already sensitive equities.

Energies

Crude inventories are due out at 10:30 EST. QM J10 looks like it broke its recent uptrend. Like the stock markets, I think this was also a weak rally. Here's the idea ... if the global economy is as messed up as I think it is, crude oil demand will be much lower than previously anticipate. Longer term views become even worse the longer we stay in this quagmire. I think this is why Warren Buffett's Berkshire significant lowered his position in top oil producing companies.

Nat Gas inventories come out tomorrow at 10:30 EST. Lately supply has been decreasing yet, this market (QG J10) has been getting killed. I'm getting a preliminary reversal signal here. I'll tell you when it confirms.

Trading Levels

Look for ES H10 and TF H10 to trade to and slightly above their respective Pivots below. If this happens and the move over the Pivot is minimal, look to short the Pivot on the way back down.

If you have questions or comments about my information, please feel free to contact me via email at ruria@manducatrading.com or toll free at 866.312.4965.

Happy Trading! - Rob

Morning Brief and Today’s Trading Levels

Good morning Traders

The only thing I was off about yesterday's trading was the volatility. What a sleeper! The action happened within the first half hour then blah.

Aside from Consumer Confidence numbers due out at 10:00 EST, retail news and retail earnings were released this morning. TGT beat earnings expectations by 7 cents, yet the response was muted to negative. ICSC said retail sales rose 2.3% month to month and 0.9% year over year. The retail sector is surprisingly strong. Broke or not, Americans know how to shop! Retailers deserve a lot of credit for managing their businesses effectively.

What makes market interpretation and forecasting so difficult is the inverse relationship b/w stocks and commodities and the Dollar. DX H10 has made a monster move from December when it was trading in the $74/75 range. I have a target of $81.68, recent high was $81.48. We could be basing here which could imply a next leg up to near $82.50/83.

Given problems in Europe and their effects on the Euro, this could happen quickly. My guess is before March Quad Witching. Assuming the inverse relationship I mentioned continues, we should see significant Dollar-driven corrections in equities and commodities until they and the Dollar find equilibrium.

Trading Levels

The Tuesday Tank following options expiration is still a solid trend trade. Don't know the of the Tuesday Tank? That's probably b/c I made it up, or at least I think I did and will claim it now.

The Tuesday Tank is what I call the predictable sell off in equities the Tuesday following an up or flat Monday session after an options expiration.

The recent rally looks to have ended. I'll wait for confirmation at the close. Assuming we close at session lows, I expect to see ES H10 and TF H10 retreat to 1065/70 and 595/600 respectively.

Remember despite the recent (low volume) rally, equities are still in a correction.

If you have questions or comments, feel free to contact me directly via email at ruria@manducatrading.com or toll free at 866.312.4965 - Rob.

Monday Morning Brief and Weekly Trading Levels

Good Morning Traders

It's good to be back. For those who didn't know, I took my first vacation in a couple years. Seeing the sun again was great!

Equities

Last I wrote, ES H10 was trading near 1065 and I suggested going long this market as well as the Russell 2K (TF H10) amid the current correction. We rallied that day and continued into the holiday weekend and through options expiration, albeit on light volume.

Friday's trading added volume however that was because of options expiration. Today will also feel the effects of expiration as repositioning continues.

As I write this, equity index futures are higher on merger news b/w SLB and SII and an earnings beat from LOW. One note, LOW lowered guidance. The short term bias continues to be positive. However, we're not out of the confirmed correction that started the week of January 24th.

TF H10 and ES H10 are trading 633.20, +3.10 and 1110.25, +4.00, respectively. Both levels are above their weekly R2 but below their daily R1. If history is any indicator, equities will end the day higher today. Not sure if you've noticed but equities have been closing higher to start the week with some regularity. I was reading a statistic that put this phenomenon in the 90% range. As they noted, this never happens in normal markets.

That being said, expect volatility early in today's action as traders reposition themselves after options expiration. Once they find their footing, they'll pick a direction and go with it. I expect a mix closed with a lower bias. Last week's rally was a low volume joke. I cashed in on it but it tried to mask the reality of the correction that started a month ago.

If you have questions or comments regarding my blog or the trading levels below, feel free to contact me via email at ruria@manducatrading.com or toll free at 866.312.4965.

Daily and Weekly Trading Levels

Morning Brief and Tuesday’s Trading Levels

Good Morning Traders

Much of the country is waking up to snow and wintry conditions. In some case, as in the Washington DC area, the weather is slowing if not halting commuters. This could limit normal trading volume, although current activity hasn't been all that normal relative to a few years ago.

As I write this, stock index and energy futures are trading higher. Metals are also up. If you haven't guess it yet, DX H10 is down about $0.36 to $80.08. The pressure on the Dollar vs a basket of other currencies, most notably the Euro, is off this morning on hopes and optimism that the EU will bail out Greece. This might be good short term, but I dont' see it fixing the long term problem. Also, Greece isn't the only EU Member hurting.

Trading Levels

As I write this ES H10 is trading 1065.25, +9.25. Please take note that ES H10 is trading and mostly to open near R1 of 1065.33. Yesterday's high was 1068.50. That being said, we have a tricky market.

If we open below R1 and hold the 1059.17 Pivot, I'll be looking to buy R1 by placing a Buy Stop at 1065.50. If filled, I'll be using a 1062.00 stop (Weekly S2). This is a risky trade because markets are still in a correction. However, markets don't just go straight down and bounce if expected. Watch DX H10 for clues.

TF H10 has a similar set up. It's trading 591.80, +4.80. R1 is 592.80, Pivot 588.60. What's positive here is that the Daily Pivot is near the Weekly S2 of 589.63. Assuming we hold 588.00, place a Buy Stop at 593.00. If filled, Sell Stop will be 588.00.

If you have questions or comments, feel free to contact me via email or toll free at 866.312.4965.

Happy Trading - Rob

Welcome Back Traders

Another week and another opportunity to make a living!

As I write this, the Colts and Saints and most of America is preparing for Super Bowl 44. The rest of the world is wondering about how messed up the global economy is.

For the record, equities are still in a correction. Friday's late rally was nice but did nothing to reverse the correction. Index futures closed the week below their respective Weekly Pivots, confirming the bearish trend. We'll see if we get follow through from Friday this week.

Some believe the outcome of the Big Game will determine/forecast the direction of the stock market - AFC (Colts) win, down market - NFC (Saints) win, up market. Last year Steelers won but we had a monster rally so this doesn't always work. There has been an uncanny correlation but as they say in this biz, Past performance is no indication of future results.

Anyway I'll be back in Monday morning with a trade idea. If you have questions or comments about my numbers below or my commentary, please feel free to contact me at 866.312.4965.

Happy Trading, Rob!

Monday's and This Week's Trading Levels

Morning Brief and Trading Levels

Good morning Traders

What a crazy couple of days huh?!

As I write this, DX H10 is staging a monster intraday move. It's trading at $80.68, +0.605, near session highs. Equities and commodities are dropping to session lows.

I recommended buying DX H10 in early December. It was trading in the $76.50 range when my indicators gave off the signal. My expectations were for this market to rally up to a more favorable valuation near $82.00.

This market hasn't gone straight up however for those of you with patience, this trade is paying off nicely. DX H10 broke out this week at $80.00. Resistance doesn't show up until the 81.50/81.75 level. If you're in this trade, i think you'll see 81.75 and then a move into the $85.00 range.

For those following along, you know that it's my contention that movements in DX H10 can explain the majority of the moves in stocks and commodities. Despite the rare trading day that the Dollar move in unison with stocks and commodities, the inverse relationship was never more evident that yesterday as investors ran to seek safety in the Dollar and dumped most everything else.

This current correction is due to liquidity being taken out of the system. Cheap money has spurred investment and bubbles around the globe. When concerns over Greece, Spain and Portugal were dominating the headlines, the real story was the tightening of credit vs weakness in EC H10.

Yesterday was a very small example of what could happen when cheap money starts to no longer be cheap. In other words, you can expect a serious sell off when the Fed decides it's time to raise rates. Rest assured, this decision is coming however I don't see it for some time. If they're premature in their efforts to turn of the spigot, look out below! You only need to remember back to last year to see how bad it can get when liquidity disappears.

If you have questions or comments, feel free to contact me directly via email at ruria@manduactrading.com or toll free at 866.312.4965 - Rob.

Today's Trading Levels