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 GS ? ? ? ? ? ? ?????????? 158.10 ???? 154 Close
Long IBM ? ? ????????????????? 174.50 ???? 169 Close
Long VIX ? ? ????????????????? 14/16 call sprd ? ? ? ?40
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Today's Working Orders...
No working orders
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Stocks...
Spu's...the first set of sell stops are under 1735. Closing under 1730 will have us looking for a break.
Bonds...
30 yr...by holding 135 look for the Bonds to move up to test 135.27 next.
Bunds...140.87 is the next area of interest with stops above. 141.70 is the longer term tgt.
TLT...maintaining and closing above 108.15 will lead to a run @ 110.
FX...
AUD/JPY...95.85-9605 is resistance. 93.20 is support.
USD/JPY...97.27 is the 200 day mvg avg. ( app 102.80 Futures) this is where you would look for the Yen rally to stop, however the longer term charts show a deeper correction might be setting up.
Yen bears should not give this level more than 30 points to see how much of a reaction you get.
AUD/USD...is seeing the expected price rejection off the 200 day mvg avg. Today's ORL# is 96.41 with 95.80 being 1st support.
GBP/USD...Sterling is unchanged on the year after putting in an ORH??day. Now the Pounds are attempting to reverse. 161.13 is the ORL #.
This level has to hold on a closing basis for the chart pattern to remain short term Bullish.
Commodities...
Oil...We're initially looking for a low in crude today for a bounce.
97.60-80 is the pivot. 96.50-24 is mvg avg support.
This will be a price action trade off the pit opening range.
The support level is an area that is a free out for shorts to see how high it can bounce.
General Comments or Valuable Insight
Today is a contra trend day. Short term traders must make up their mind if they think the party can continue or not.
We have only a token long equity position in specific names with defined stops.
Use the Chicago Pit opening ranges to match up your technical levels with short term capital flows.
Those looking for a "Risk On" Trade, Long AUD/JPY @ support with a 30 point closing stop is the ticket today
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....10/23/13 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
Micap...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 the Euro 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 this Spu/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.
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.
For Glossary of terms and abbreviations click here.
