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?
No current positions or working orders
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Stocks..
Nasd 100...3083 was last months close. It all comes down to the end of day, will it close higher or lower on the month?
Bonds...
30 yr....132.15 has to hold on a break for higher.
FX...
Euro...needs a close below 131.95 for lower. In case you forgot it's last years close.
EUR/AUD...148.09 will be a key indicator for market tone. This cross has come?35 figures in 14 months. This is Long Euro/Short Aussie. The cross is attempting to top on the longer time frame charts.
In July 2012 the Euro put in a 120.50 low. At the time I said it was a huge Bear Trap, with the monthly double bottom @ 116.00 in EUR/AUD confirming it.
I also stated in my qtrly updates that there was no upside in the Aussie?unless there was some convincing price action and closes over 105.75. The high of the past 4 qtr's was 106.25.
FYI...all the fundamental traders told me I was full of it (unfortunately a couple of them were fundamentally right but technically wrong! They are no longer clients since they shut their doors).
?
Open ended macro trading, putting them on and letting the margin?department take you out, is not a prudent strategy for any investor.
John has a trading methodology that limits his exposure on all his macro calls allowing him to take a view with defined risk. His style does nothing but print money.
Charts don't lie and 40 year macro support and resistance levels never go away! They just patiently wait?to bite the unprepared in the behind.
Trade where and when you can manage your risk.
The London whale was never wrong. Right you are!
We'll be looking to see if this direction has the potential to change over the next few weeks.
Commodities...
Oil...106.88-50 is support. 105.32 is unchanged on the month.
Gold...1420 is resistance and the upside pivot. Sell all rallies until proven wrong.
Silver...look for a bounce @ 23.40. 22.85-95 is first good fib support.
General Comments or Valuable Insight
It's month end!
I'm partial to buying the hard breaks today in the Bonds only because we're going into a long weekend and most market participants, with the exception of the Bots, will check out early wanting an unencumbered mind over the weekend.
The game starts all over again Monday night with the Asian opening. We'll see how eager everyone is to push markets into mid week next before unemployment.
Short Term View...
Trade instruments off their own technical s
Time Frame Trading.
Medium Term View... qtrly update Published? 6/24/13
Food for thought, a little reflection for the long weekend.
These are static levels that do not change!
Once generated, they never go away. They become static technical levels.
30 Yr. Bonds ... This qtr we'll focus 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.
Long term, we will continue to favor the short side of the Bonds when market conditions allow. Our strategy remains to sell the Bonds at these levels, with tight stops, until proven wrong.
The decoupling of the treasuries and the shift to higher rates was a possible scenario that has been on our radar for well over a year. It would seem that it's begun with higher rates driving profit taking in the Equity Indices.
This is a paradigm shift in the board where investors will lose money on their Bond Funds and Equity Funds at the same time.
It's the worst of all scenarios for the private investor since the only way to protect your wealth is to sell premium in the interest rate futures and deliver the Bonds, if called, for the foreseeable future.
This is THE primary strategy we've been preaching to our high net worth clients for the past year.
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.
BUND...143.75 will be our pivot all qtr. Sell any rally in the Bunds at this level with a tight stop.
Spu's... Last qtr we used 1562, this qtr we will be using 1590 as our macro pivot. We've had an initial swing count, "Target", for the past month that comes in @ app 1562 for a sell off. Closing and maintaining under this level will precipitate more selling.
Nasd 100...2890 is our closing upside pivot. Closes under 2800 will lead to a test of 2770. Closes below this level will signal a much bigger corrective phase is afoot.
DAX...8000 remains pivotal, closing below 7870 will lead to a further sell off.
Euro Stoxx 50...2700 was our upside closing pivot last qtr. Maintaining below 2560 is negative.
Nikkei...remains bid over 12,500-12,600. It weakens under 12,260 close.
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. This qtr rising treasury yields will continue to cap rallies as investors will be desperate to find safe low volatility high yielding returns.
Gold needs to maintain above 1265 for higher. Sustained price action under 1265 will lead to a much deeper correction.
Silver...we'll be using 20.50 "close" for short term market tone.
Good above, negative below.
Currencies...
AUD/USD...? continues to be a good risk barometer. 102.25 ish is the macro pivot that never goes away! ( This is a multi-year level). 96.70 is now qtrly resistance and our upside pivot. We will patiently wait to sell rallies.
USD/JPY.... This qtr as we are using 95.00-94.85 USD/JPY ( app 105.30-40? Futures) as our closing upside pivot. All swings will be measured from this level.
Mrs. Watanabe isn't stupid, when markets have fits of Risk aversion, the initial reaction will be Japanese savers bringing their Yen home for mattress stuffing ( Yen futures rally with Equity Index weakness). Look for a highly technical trade.
EUR/USD...."119.75" +- 100 pips....is the life of Euro macro pivot. Any price action the first time into this zone should be suspect ( possible Bear Trap), however closing a couple of days below this level is key to another big swing. This level has run several 20 cent swings in the Euro. It's a significant area! These #'s are static and will not change.
Euro needs closes over 133.50-60 for higher. 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 the Euro Vs. Selling all other currencies)
We expect more of the same, making the Euro the least rewarding currency to sell against the dollar.
EUR/JPY...needs closes over 130 for higher.
AUD/JPY...89.50 will be the inflection and pivot level.
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 now becomes the key resistance and upside pivot for the next qtr.
Last qtr many of the infrastructure names were up over 40%. Look to reload on these with any substantive summer 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
We'll update the Grains mid July.
In the meantime growing conditions favor the Midwest as the droughts are primarily in the Southwest. We'll let this set up again.
Copper...343 was the previous 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....closes under 89.30 are needed for a bigger correction.
General Outlook.
For the past couple years, the market has provided an equity check for the long term Bulls by attempting a break back towards the previous years close or lower.
Last year it was precipitated by an unsettled Europe after 5/1/12, when we experienced market volatility with a 140 point S&P drop, which fell just shy of the 2011 close by a few points.
We'll be looking for similar price action again this year as the summer temperatures heat up and trading is left to be run by the robots.
As previously, stated we're Long term Bearish bonds, and we will maintain a sell the big rally bias for the foreseeable future.
Every instrument can be an island unto itself. Do your homework on companies
that hold an interest for you. A prepared investor should have their sector shopping list ready when markets swoon.
The Equities and and Equity Indices will be a low volume high Volatility trade
all summer. We're not looking to buy and hold anything until the fall.
You don't have to catch every swing, Just don't take it in the shorts!
Footnote: All our signals are based off of Cash and Front month Futures markets.
ETF's are priced off of the Cash or Futures, not the other way around. ETF traders should always have the underlying instruments available for level verification.
For Glossary of terms and abbreviations click here.