THE MAJOR PLAYERS: IS THE DOLLAR SELL-OFF & EUROFX RALLY OVER?
In a mid January Update I pointed out that the eurocurrency had rallied over the 20 day ma on the daily chart while the dollar had sold off under it. Technically that was significant because the last time they did that was in October. What followed at that time was a strong rally in the eurofx and a sell-off in the dollar. I suggested a high probability they would do exactly the same thing this time around. They did. That changed today.
Today the eurofx violated that average while the dollar succeeded in getting over it. The eurofx also violated its nearterm uptrend. The dollar violated its nearterm downtrend. The next few days could be critical because they do need follow through. If there is follow through, most commodities should start to sell off again while the dollar continues to gain ground.
In the meantime many other markets are suggesting further rally which contradicts what the eurofx and the dollar are now suggesting. If the eurofx regains a hold, a projection to 134.00 is still in the cards. If the dollar fails to hold its gain, a projection to at least 78.000 is most likely.
As pointed out before, the long term trends are still the same. The eurofx continues to be in a long term downtrend. The dollar continues to suggest the beginnings of a major uptrend. The key now is to determine whether today's action is the resumption of those trends.
TRADE ALERTS:
Buy April hogs.Buy 89.25 Limit. Protective stop 87.85. Potential projection 92.50. (Potential risk: $560. Potential reward: $1300).
Reasons for the Trade:
1. On the monthly chart hogs rallied back over the 20 day ma last month with follow through this month. That is positive.
2. The monthly chart is triggering a preliminary buy this month.
3. The weekly gapped over the 20 day ma this week. That is positive.
4. The weekly chart is triggering a preliminary buy this week.
5. On the daily chart, hogs rallied and closed back over the 20 day ma today. That is after closing below it yesterday.
6. On the daily chart hogs appear to be starting a third wave up.
Buy May cotton.
Buy 93.15 stop. Protective stop 91.95. Potential projection 95.85. (Potential risk $600. Potential reward $1350).
Reasons for the Trade:
1. The monthly chart formed a key reversal bottom in December.
2. Both the monthly and the weekly are holding on long term support.
3. The weekly has a previous buy signal that is still intact.
4. The weekly could be forming a potential 1,2,3 bottom formation.
5. On the daily chart cotton is holding in support going back to November.
6. Today was an inside day that can trigger a signal and market direction.
Sell April mini gold.
Sell 1713.00 stop. Protective stop 1736.00. Potential projection 1650.00. (Potential risk $759. Potential reward $2079).
1. On the monthly chart gold is selling off from the same level that stopped the market in December.
2. The weekly chart is in a downtrend. The recent rally could be the setup for a third wave down.
3. On the weekly chart, the high to the recent rally formed a key reversal top - suggesting a near term trend change from up to down.
4. On the daily chart gold violated and closed under the uptrend formed since the 12.29 low last Friday. Today it attempted to rally over it but failed and closed again under that trendline.
5. Gold triggered a sell today.
Buy March Canadian dollar.
Buy 100.26 stop. Protective stop 99.65. Potential projection 101.75. (Potential risk $610. Potential reward $1440).
Reasons for the Trade:
1. The monthly chart triggered a buy last month.
2. The monthly chart formed a major key reversal bottom in October.
3. On the monthly chart, the cd is attempting to rally back over the 20 day ma.
4. On the weekly chart, the cd rallied over the 100 day ma the week of Jan. 23. It has traded above it since.
5. On the daily chart, last week's sell-off held at the 20 day ma.
6. On the daily chart, the cd rallied over the 150 day ma in late January. It has traded above it since. That is positive.
7. A buy would negate a sell triggered today. Normally when a market does so that quickly there is follow through in the new direction.
CHANGE IN OPEN STOPS:
Short March silver from 34.455 down to 34.085.
GRAIN COMMENTS:
MAR CORN:
I shorted it last Friday. I lowered the stop to 641 for Monday because it rallied right back over the 100 day ma. That is bullish. The stop was reached. It continued to hold that average today. The key reversal top that was formed last Thursday has not had follow through yet. Watching closely. Closed 633 1/2, down 6.
Position: Short 631 (2.10). Exit 641 (2.13). Loss $555 (reg. contract). Loss $155 (mini). (+comm/fees).
MAR MINI WHEAT:
On Friday it failed to hold both the 100 and 20 day ma. On Monday and today it has attempted to rally back over them without success on the daily. The monthly is forming a key reversal top but it has a buy signal. On the weekly it failed from the 100 day ma again. Yet the daily chart has been in an uptrend since the mid December low. It has even rallied over and held above the downtrend line formed since the May 2011 high. Confusing to say the least. Just watching. Closed 635, down 6 1/4.
MAR MINI BEANS:
Today's high 1261 3/4. The high on Oct. 27 was 1262 before they declined to almost 1100. The 150 day ma intersects at 1265. The monthly chart is butting up against the 20 day ma. They are in resistance territory. On the other side of the coin, according to the daily chart beans are in the process of a second major wave up with projections to 1300. The second wave up has already had too deep corrections - unusual but sometimes that is how a market goes about it. Beans have been trading above the 100 day ma since Feb. 2 on the daily. They're also above it on the weekly chart. That is very bullish. My point being - if beans sell off from here, I suspect it will be an opportunity to buy. Closed 1255, up 3.
MAR MEAL:
On the weekly chart meal is back over both the 100 and 150 day ma. That is after failing and closing well below them last week. It also has a buy. If the current wave up on the daily can follow through, meal has a target of 340.00. Closed 330.10, down .40.
The monthly has a buy. The weekly has been closing over the 20 day ma for the fourth week in a row. This is the first time since it collapsed under it in mid Sept. It has projections to 55.00. It, too, is in resistance on the daily chart. Watching closely to buy. Closed 53.02, down .03.
MEAT COMMENTS:
APR HOGS:The high to the second wave up (referred to last time) has still not been reached as hogs sold off on both Friday and Monday. On Monday they closed under the 20 day ma but are right back over it today. This chart continues to suggest that it is forming a bottom. This recent sell-off could be the completed correction to the second wave up. It is almost equivalent to the sell-off seen for the first wave. A trade could be developing. See Trade Alert for details. Closed 89.62, up 1.65.
APR CATTLE:
In the last Update I suggested that they looked as though they were starting a correction to a second major wave up with projections down to 126.00 to 126.50. On Friday they sold off to 126.62 and held. That was right above the 100 day ma. In Thursday's Update I further mentioned that if they held at that level and started to rally they may follow through with the bullish picture on the monthly chart. Since that low on Friday they have been rallying. As we speak they are testing the same resistance level that has been an issue since October (the high 129.00 level) but they might just make it through this time. The weekly is triggering a preliminary buy signal. Closed 129.25, up 1.12.
SOFTS:
Switching to May in remaining softs.
MAY COTTON:
The strong sell-off seen last Thursday settled out on Friday. Basis the May it has been holding that 92.00 support since. A trade could be developing. See Trade Alert for details. Closed 92.84, up .30.
MAY ORANGE JUICE:
An inside day yesterday triggered another sell today. There was some minor follow through but it is holding at support going back to early January at 175.00 approximately. It appears that it could be a bit oversold. Just watching. Closed 177.20, down .40.
MAY COFFEE:
The negative technical situation pointed out in my last Update is controlling the market. Basis the May contract the number to watch was 213.85 on the daily chart. It violated that yesterday with follow through today. The current low 205.30. My long term projection was 200.00 for coffee and near term it should reach that. If 200.00 does not hold, the next target is 175.00. Closed 206.15, down 8.45.
MAY COCOA:
It rallied today up to the 20 day ma. The daily chart is giving a strong indication of a near term bottom. The recent sell-off appears to be the correction to the second wave up. It could now be starting a third wave up. Watching closely. Closed 22.70, up .78.
MAY SUGAR:
Stops were reached today as it continues to consolidate. Today's low 23.17. The main support currently is at 23.00. Closed 23.38, down .41.
Position: Long 23.85 (2.7). Exit 23.20 (2.14). Loss $817 (+comm/fees).
Projection: 25.00.
METALS & ENERGY COMMENTS:
MAR COPPER:It never reached the 400.00 projection. It started to sell off on Friday and violated the 20 day ma today. The low is 378.40. It has some support at 375.00. Possibly it will hold. For now all it is doing is consolidate above 375.00. Just watching. Closed 381.45, down 2.50.
APRIL MINI GOLD:
I tried to short it today. The price was almost reached but not quite. In spite of that it did trigger a sell today. I'll try again tomorrow. See Trade Alert for details. Closed 1717.70, down 6.90.
MAR MINI SILVER:
It triggered a sell on Friday. It triggered another one today and is trying to follow through. But in reality it has been in the same range since late January. The key is whether it can sell off under the 20 day ma. Currently that intersects at 33.125. Move stops from 34.455 down to 34.085.
Position: Short 33.595 (2.10).
Projection: 32.000.
APRIL MINI CRUDE OIL:
The downtrend formed since the Jan. 5 high was violated yesterday with some follow through today. Crude does have a buy from lower so if it can follow through, technically it has a potential projection up to 107.50. Long term technicals support that possibility. The monthly chart has a buy while the weekly is triggering one this week. Just watching. Closed 101.08, down .21.
CURRENCIES & FINANCIALS:
MAR MINI JAPANESE YEN:It has been in a "free fall" and really got carried away with it today. The range was from 129.30 down to 127.34. It is now under the 128.00 support. On the weekly chart it is now under the 20 day ma but, bottom line, it is merely at the low end of the range it has been working in since November. On the weekly it would need to take out 126.99 to possibly trigger a drop to 125.00. Closed 127.46, down 1.40.
MAR SWISS FRANC:
I tried to buy it last Friday. The price was not reached as it sold off and triggered a sell. The low today 108.37. There is support at 108.00. It continues to consolidate between that price and 110.00. Watching closely. Closed 108.52, down .71.
MAR DOLLAR INDEX:
Stops were reached today. It also rallied over both the 100 day ma and the 20 day ma. That is positive. The key now is follow through. Closed 79.694, up .649.
Position: Short 78.850 (2.8). Exit 79.410 (2.14). Loss $615 (+comm/fees).
Projection: 77.400.
MAR MINI EUROCURRENCY:
Stops were reached today. It also violated the 20 day ma but did rally back over it on globex. Technically it would need more follow through to confirm that it has topped. Watching closely. Closed 130.94, down 111.
Position: Long 132.22 (2.7). Exit 130.89 (2.14). Loss $886.25 (+comm/fees).
Projection: 136.00.
MAR CANADIAN DOLLAR:
I tried to buy it today. It triggered a sell instead but held at the 20 day ma. There was not much follow through. I will try again tomorrow. See Trade Alert for details. Closed 99.76, down .28.
MAR AUSTRALIAN DOLLAR:
An inside day yesterday triggered a sell today. It held at the 106.00 support. The current rally that started at the 98.00 level is more than mature but if it holds that support, the 110.00 projection mentioned before could still be in the cards. Closed 105.96, down 1.07.
MAR E-MINI S&P:
It continues to try to get over 1350.00. If it cannot do so soon, it will sell off and try from a lower level. On the weekly chart it is pushing into territory that stopped the market in July 2011. In spite of that, the monthly chart strongly suggests higher prices. If this recent rally has follow through, it has projections to 1440.00 approximately. Closed 1347.75, down 1.25.
MAR 10 YR. NOTES:
I tried to short them today. They triggered a buy instead. There was not much follow through so far. The high 131.185. They did close over the 20 day ma again and that is positive. Just watching. Closed 131.170, up .130.