October 28, 2013 - MDT Pro Tips A.M.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
Current Positions
Long TBT ? ? ? ? ???????????????? 72.57??????? 71.90
Long IBM ? ? ??????????????????? 174.50 ???? 172.40 Close
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Today's Working Orders...
No working orders other than the stops on current positions
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Stocks...
EWW...Mexico finally put in a trad able low on Friday with an ORH day.?Friday's low also put in a double bottom on a weekly chart.
Sustaining and closing above 66 targets 67.15-25 followed by 68.75.
Meli...as long as this closes above 138, this tgt's 150.
AAPL...earnings today.
P...Pandora put in an ORH day Friday. Pattern is positive as long as it remains over 26.25.
KMI...closing above 37.15 will lead to more gains.
Bonds...
30 yr....135.00 will be pivotal. Sustained and closing price action under 135.00 is needed for a downside to materialize.
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FX...
USD/JPY...is showing bottoming action. Maintaining over 97.40 is Yen negative.
USD/CAD...could rally to retest the last breakout of 103.80 ( app 96.33 Futures). This would be a low risk sell with a 30 point closing stop.
Commodities...
Gold...Bulls are back. Traders can manage any Long attempt against
1343. As long as 1343 holds on a closing basis, look for a test of 1400.
General Comments or?Valuable Insight
Check your earnings calendar, opportunity is in the individual names.
EWW "Mexico" should be monitored for an opening range trade today.
By holding 65.25 we're looking for higher prices.
Short Term View...
Individual stocks look to be an easier read based off their own technical s. The Equity Indices seem stretched at these levels.
Go with the flow. Use the 9/30 closes as your macro pivots. Trade the opening ranges and early time frames.
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Medium Term View... qtrly update Published? 10/1/13....10/25/13 updated
These are static levels that do not change! ?Once generated, they never go away. They become static technical levels.
The outlook is to be used as a tool to keep you from executing trades from the right side of the market at key technical areas.
Stocks...
Spu's... Last qtr we used 1590, this qtr we will be using 1730 as our macro pivot. We've had an initial swing count "Target" @ 1730 published last qtr. We hit that tgt.
The swing count off the last 1640 low generates an ultimate 1820 target as long as there is no close below 1730.
Nasd 100...2890 was our closing upside pivot last qtr. All new strength is needed over 3240 for another 100 points taking us to the 2/3rds of the life of Nasd.
By maintaining over 3340 close this remains positive with much higher tgt's
Midcap...1258 is the closing upside pivot.
DAX...8000 was last qtr's pivot. 8670 is this qtr's pivot.
Euro Stoxx 50...2700 was the pivot last qtr.
This qtr we're using 2940. All new closing price action above this level is needed for higher.
Nikkei...remains bid over 14,400. It weakens under 12,260 close.
?Bonds...
30 Yr. Bonds?... Last qtr our focus was on 140.00 as our closing barometer.
We'll be looking to sell any rally that comes close to this re-test of the qtrly breakdown pattern again this qtr.??Long term, we will continue to favor the short side of the Bonds when market conditions allow. Our game plan remains to sell the Bonds at these levels, with tight stops, until proven wrong.
The strategy we've been preaching to our high net worth clients for the past year has been to sell premium in the interest rate futures on big bond market rallies and deliver the Bonds, if called, for the foreseeable future.
We see very little downside in selling premium at strikes a couple of points out of the money at our sell levels in the nearby future, collecting the premium, and delivering the Bonds if called.???We believe we are going into a more normalized Interest rate environment with a reversion to the mean in rates having begun.
The low in interest rates is in.
133.15 will serve as our qtrly pivot.
BUND...143.75 was the pivot last qtr. Sell any rally in the Bunds at this level with tight stop.
139 will act as support and the downside pivot.
FX...
AUD/USD...? 96.70 was last qtr's resistance and upside pivot. 94.25 will act as the key closing pivot level this qtr.
USD/JPY....?Last qtr. we used 95.00-94.85 USD/JPY ( app 105.30-40? Futures) as our closing upside pivot. All swings will be measured from this level.
98.95 is this qtr's macro pivot ( App 101.24 Futures). We've been running back and forth through this level over the past 2 weeks. Use it for market tone.
A close above 100.40?USD/JPY?is needed for a sustainable downside move in the Yen.
Mrs. Watanabe isn't stupid, when markets have fits of Risk aversion, Japanese savers will bring their Yen home for mattress stuffing ( Yen Futures rally with Equity Index weakness). Look for a highly technical trade.
Euro?needs closes below 133.50-60 for lower. Closes under 127.50 will lead to a test of the 120 area.
Since last July the Euro has remained bid on the crosses (meaning investors have been buying theEuro?Vs. Selling all other currencies)
There is no change in the downside pivot this qtr., we expect more of the same, making the?Euro?an unrewarding currency to sell against the dollar.
GBP/USD...put in an?ORH qtr. This is a price positive formation. Our downside support # is 159.40.
157.40 was last qtr's pivot. This is now a primary buy zone on any retest. This level would be a gift to buy @ the first time down.
Buy on the very big break list.
163.82 is the first tgt with buy stops above. Ultimately we see 169 as long as the Fed remains accommodating.
Commodities...
Gold & Silver...last qtr. the metals had bouts of selling driven by a shift to high yielding Equities, which we viewed as a side effect of a Risk On board.
Rising treasury yields will continue to cap rallies, as investors will search for safe low volatility high yielding returns.
Bond market rallies will remain highly correlated to metals rallies over the short term.
Lower rates will be price positive the Metals...Follow the Bonds
Gold... needs to maintain above 1420 for higher. Sustained price action under 1265-75 will lead to a deeper correction.
?Silver...we'll be using 21.90 "close" for short-term market tone. Good above, negative below. Last qtr we were focused on 20.50 for our pivot. This level remains pivotal.
Platinum...we'll revisit Platinum on a close over 1520.
Copper...343 is the qtrly pivot. Closing and maintaining below 330 will be needed to test of 295. No Change. 2.95 will act as the downside pivot for another sell off.
Oil...last qtr 89.30 was our pivot. This qtr there is no upside until we close over 104.70-105.30
Natgas...The Infrastructure names will continue to be our preferred way to play the Natty.
For the average investor the names provide more liquidity and a user-friendly venue for capturing Alpha.
4.17 was key resistance and upside the pivot for the last qtr.
This qtr the Futures show 3.70 as resistance.
Look to reload on the infrastructure names with any substantive October-November sell off in the Equity Indices. Again, don't be in a hurry!
Grains...Our long-term strategy has been to buy 8-10% breaks in the ETF's & ETN's.
Grain Longs are on hold for a while.
Soybeans are caught between 12.40-14.45.?
General Outlook.
The high in the?SPU/BOND?matching the earlier swing counts in the Spu @ 1730 will remain front and center.
There is limited upside until we either get a big enough break closer to 1600 to buy or closes over 1730, which will generate a new upside tgt.
We are not in a hurry to buy the Equity Indices, although we're looking for a tradable low for a year-end rally later in Oct.
Select names should be viewed on an individual basis, buying only where there is measurable risk /reward.
I can't stress enough how big that technical level was in the Spu/Bond spread on 9/19. The market took 6 years to come back and print that level.
As of Unemployment 10/22/13 we have not closed back above this level. Closing above thisSpu/Bond?level will add a new dynamic to the market.
We'll need to see all new strength over 1730?Spu & SPU/BOND?level to generate new upside tgt's.
As long as there is no close below 1730?Spu's,?we have a tgt of?1820.
If and when the?SPU/BOND?level is violated we'll let you know. This will generate new higher longer term tgt's.
Nasd 100...tech has the most potential from a chart perspective.
It's still a long way from it's all time high. This should continue to move in 100-150 point increments.
Every instrument can be an island unto itself.? We continue to favor individual names over the broader Indices.
Midcap & Nasd?will continue to be sector rich for single instruments to play.
Do your homework on companies that hold an interest for you.
A prepared investor should have their sector-shopping list ready when markets swoon.
As previously stated,?we're long term Bearish Bonds, and we will maintain a sell the big rally bias for the foreseeable future.
We'll use rallies into the high 130's to sell before we buy. Presently, the Bonds are in need of some help with an equity sell off to get there.
The world is trapped Long Bonds from higher levels, leading us to the conclusion that big rallies will be met by willing sellers.
AUD/USD...we favor Aussie on breaks against short Yen and Euro when technical s allow.
Precious metals...we are on the alert for a tradable low later in the Qtr. Until then it's a range trade at the key technical levels.
OIL...sell the big rallies until proven wrong.
You don't have to catch every swing; just don't take it in the shorts!
Trade where you can manage your risk. Use this as the template to do just that. Trade from a side at a specific area with a tight stop.
The Fundamental story follows the technical s.
Being a pragmatic technician, using the correct levels to manage risk, allows the prudent investor to be right market direction with limited downside.
We'll update our outlook and tgt's as market action dictates.
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