Trading Journal 2/26/14

Another day of consolidation within the major indices with most closing near flat, with the exception of small caps which closed up 60 bps on the day. Global equity markets were mixed while bonds continued to rally after showing strength to start the week. Bias in the major indices continues to be to the upside until we breach the 8 day EMA on volume. Light volume continues to help the bulls grind higher despite the somewhat aggressive v shaped move off the lows.

Leaders to the upside included solar stocks (TAN), home builders (XHB), retail (XRT), regional banks (KRE), semiconductors (SMH), basic materials (XLB), and as mentioned above, small caps (IWM).

Laggards on the day included large cap biotech (IBB), energy and oil service names (XLE, OIH, PXJ), telecom (XTL), utilities (XLU), transports (IYT), and financials (XLF).

In the commodity space gold and silver experienced some downside today as they try to work off overbought conditions and will likely test the 21 day EMA in the coming days. Both need to hold their prior breakout areas discussed on my weekend posts to remain bullish.

Crude oil continue to build a base above the 8 day. A break and close above 103 will warrant a test of 105. Support below remains 100.5 (100 day EMA) and the prior breakout area just below that.

Gasoline pulled back into its 21 day EMA as it looks to build a base above 2.75 support.Resistance at last week’s highs (2.86).

Natural gas is well off Monday’s high though it is attempting to find some footing at support of the prior breakout area and 100 day EMA between 4.50-4.55. Below that we will likely test 4.20 and the 200 day EMA at 4.12. Resistance above at today’s gap down.

Sugar reached its price target of 18 yesterday as it moves into overbought territory. It continues to build a base above the 200 day EMA at 17.05 as the shorter term moving averages catch up to provide further support.

Oats put in a new ATH by trading up to 498 intraday but reversed and closed back below yesterday’s close. Expect some downside follow through given the heavy volume. Support at the 21 day 435.72

Soybeans continue to ride the 8 day EMA higher, no reason for the trade to change until we get some sort of reversal candle. Some resistance above at 1400.

In the currency markets the AUD/USD is beginning to look a little heavy here after breaking the 21 day which indicates it may need more time to build above .8820 support to further build out the right shoulder of a potential inverse head and shoulders pattern. A break of .882 and we will likely retest the lows in the mid .86s. Key resistance remains the 100 day EMA at ~.907.

EUR/USD small downside today as it continues to build a base above the 50 day EMA. Resistance remains 1.3770-1.38.

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Trading Journal 2/25/14

Another day of indecision for the major indices despite strength in tech names such as TSLA and PCLN. Bonds finally moved higher after a two week period of consolidation and now look to test the upper part of its recent trading range. Global equity markets were down slightly on the day across the board with a few exceptions. We are definitely in neutral for now, but the bias for a break of the recent range is to the upside given that we are still above the 8 day EMA. We are seeing continued rotation into sectors that have lagged the recent V shaped bottom in the major indices which will allow other sectors to reset and retake leadership positions.

Leaders on the day included retail stocks (XRT), consumer discretionary (XLY), home-builders (XHB), large cap biotech (IBB), and consumer staples (XLP).

Laggards on the day included steel stocks (SLX), gold miners (GDX), coal stocks (KOL), transports (IYT), financials (XLF), regional banks (KRE) and semiconductors (SMH). We do not want to see these types of sectors continue to lag for a prolonged period or we risk a move to the downside.

In the commodity space gold continues to inch higher after clearing resistance at 1329, while silver consolidates under resistance at 21.90-22.10.

Crude oil looks like it wants to retest the $100 area to work off some overbought conditions before heading higher. A break and close above $103 would target $105, while the weekly target remains ~$109.

Natural gas followed Monday’s drop with further downside as it looks to retest crucial support at $4.50 in the coming days.

Wheat continues to consolidate below the 100 day. Above 620 it will see $647 at the 200 day EMA.

Nothing exciting in the major currency pairs as they continue to consolidate their recent moves.

Trading Journal 2/24/14

The major indices climbed higher throughout the session on light volume and closed in the middle of the day’s range after seeing some selling pressure come in mid-day. Bonds were flat to marginally lower on the day. Bias in the major indices continues to be to the upside as we are above the 8 day.

Leaders to the upside included solar stocks (TAN), oil service names and energy (PXJ,OIH,XLE), regional banks (KRE), gaming stocks (BJK), and large cap biotech (IBB).

Laggards on the day included basic materials (XLB), steel stocks (SLX), utilities (XLU), telecom (XLT), agriculture stocks (MOO) and the real estate index (IYR).

Big moves in the commodity space to start the week, with gold experiencing some upside above resistance at 1329 but silver looks like it needs a few more days to get above resistance at 21.90-22.10.

Crude oil continues to consolidate above the 8 day and a break of 103 will spur a move to 105. Weekly chart target remains 109.

Natural Gas volatility continues!!! Traded up to $6.49 on the day and fell apart, closing just off the lows at $5.49 Support at 5.24. Resistance at 5.88.

Sugar broke above the 200 day EMA at 17.03. Target remains 18 on the inverse head and shoulders breakout.

Soybean meal and soybeans were up on the day while soybean oil pulls back to the 8 day as it becomes extended after a nice two week move to the upside.

Wheat futures continue to flag below the 100 day EMA. A break of 620 will warrant a test of 647.70 at the 200 day EMA.

Not a ton of action in the currency markets except that the AUD/USD found support near the 21 day EMA and continues to flag below the 100 day EMA. Would expect a breakout of the flag/inverse head and shoulders pattern this week above .907 with a target of .9158 and .9283 (200 day EMA). Stops below .89 as outlined in my post a week ago or .892 if you want a more aggressive stop.

Trading Journal 2/21/14

A relatively quiet OPEX day with the major indices showing early strength from the overnight session into the cash open, but faded throughout the day and closed flat to lower on the day. The 1850 area on SPX continues to be resistance, but the bias for the major indices remains to the upside as we are still above the 8 day EMA. Bonds were relatively strong on the day bouncing off support at the 50/100 day EMAs, which is not surprising given the slight down day in equities. More analysis to come during my weekend posts.

Leaders to the upside included large cap biotech (IBB), transports (IYT), regional banks (KRE), home builders (XHB), and retail (XRT).

Laggards on the day included oil service names and energy (OIH, PXJ, XLE), steel names (SLX), telecom (XTL), semiconductors (SMH), gold miners (GDX), and solar stocks (TAN).

In the commodity space gold and silver continue to flag and showed strength on the day, closing just below resistance at 1329 and 21.90 respectively.

Natural gas closed up another 3% at 6.24, resistance above at 6.40.

Heating oil hit resistance at 3.19 and sold off closing down 2.5% on the day.

Platinum and Palladium both testing and holding support, closing up 1.22% and .5% on the day.

Sugar broke out above the 100 day EMA as mentioned yesterday, should test 17.02 next week with a breakout target of 18.

Soybean oil, meal, and oil continued higher and closed modestly higher on the day.

Nothing huge occurring in the major currency pairs as they spent the day within their recent range as they consolidate.

GBP/USD looks to want to visit the bottom of its recent trend channel in the high 1.63s.

Trading Journal 2/20/14

Stock market bulls held where they had to today as the major indices came into the 8 day EMA for a successful test that may be setting us up for new highs and a further run of stops above the prior highs. We saw some selling pressure in the overnight session but recovered and opened flat/higher in the cash markets and continued higher throughout the day. As long as we hold the 8 day the bias remains to the upside since yesterday’s potential reversal candles saw no follow through from the bears. Overseas equity markets we mixed as well on the day and not a whole lot occurring in terms of bonds.

Leaders to the upside included gold miners (GDX), the transports (IYT), large cap biotech (IBB), gaming stocks (BJK), and solar stocks (TAN).

Laggards on the day included the real estate ETF (IYR), retail (XRT), regional banks (KRE), financials (XLF), coal stocks (KOL), and consumer staples (XLP). Continued weakness in financials, regional banks and consumer names is concerning regarding the sustainability of new highs if they are made.

In the commodity space gold and silver continue to flag and will continue higher with breaks of 1329 and 21.90 respectively.

Gasoline reached the target of 2.85 with a slight momentum divergence, though price remains bullish above the 8 day EMA.

Natural gas volatility continues with another wide range of trading as it traded 6.40 intraday only to close below yesterday’s low. I don’t know where this is headed to be honest, I thought it would have more difficulty making new highs than it has.

Heating oil upside continues as it moves to just under the target of $3.20 mentioned yesterday, RSI has room to run but resistance at 3.23-3.24 remains.

Sugar holding the neckline of a possible inverse head and shoulders as it flags below the 100 day EMA at 16.44. Break above that level we will see 17.03 and then the target of 18.

Currency market pairs continue to consolidate, not a ton of action there. One thing though is that USD/JPY looks to be developing a bias toward breaking out to the upside which should help the Nikkei and equities as a whole if yen weakness continues.