Morning Brief and Trading Levels
February 5th, 2010 Posted in UncategorizedGood 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
| Daily Pivots | 2/5/10 | ||||
| EQUITIES | R2 | R1 | PIVOT | S1 | S2 |
| ES H10 | 1095.42 | 1078.58 | 1068.92 | 1052.08 | 1042.42 |
| YM H10 | 10239.33 | 10109.67 | 10032.33 | 9902.67 | 9825.33 |
| NQ H10 | 1788.42 | 1761.83 | 1746.67 | 1720.08 | 1704.92 |
| TF H10 | 611.87 | 601.23 | 594.77 | 584.13 | 577.67 |
| ENERGIES | R2 | R1 | PIVOT | S1 | S2 |
| QM H10 | 77.47 | 75.31 | 73.87 | 71.71 | 70.27 |
| QG H10 | 5.59 | 5.50 | 5.36 | 5.28 | 5.14 |