Bill Cara’s Blog for Jun 8, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning, Geoff here.
This weekend, EU officials will be discussing Spain’s request for a bank bailout. With unemployment high, what policy actions will be taken in order to help the overall situation?
Yesterday, Fitch warned that it would cut the AAA rating of the United States if there is no credible fiscal plan put in place.
They are in quite a bind, are they not?
With pressures mounting both for and against more liquidity programs, it seems clear to me that they have no choice – Bernanke did not help my case yesterday, but eventually the printing presses will be running at full tilt. With all the liquidity already thrown at the problem without a permanent solution, how much effect new reflation efforts will have on the main problem is questionable. What is probable is that the price of gold and other commodities will be much higher down the road.
Gold rallied up to the 38% retracement, was overbought and got taken to the woodshed on Bernanke’s speech. What else is new? However, my studies show that the recent lows should hold barring a major “risk off”, throw that baby out with the bathwater event – and if that occurs, gold will be on sale.
There is a lot of talk about “risk off” on the television, but as long as $SPX holds above the Fibonacci support, the downtrend line and the 1300 level, the market is pricing in the liquidity pump. If those levels fail, then caution is warranted.
The dollar is holding support, but if that support fails the markets should rally.
Have a great trading day!
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
|Symbol||Name||Last Trade||Change||Related Info|
||17.94 (0.94%)||Components, Chart, More|
||8.20 (0.39%)||Components, Chart, More|
||30.42 (0.99%)||Components, Chart, More|
||59.06 (0.96%)||Components, Chart, More|
|^AEX||AEX General||Chart, More|
|^OSEAX||OSE All Share||437.06
||4.23 (0.96%)||Components, Chart, More|
||5.20 (1.69%)||Components, Chart, More|
||32.75 (0.56%)||Components, Chart, More|
||56.06 (1.03%)||Components, Chart, More|
||7.90 (0.88%)||Chart, More|
||5.09 (0.38%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||492.94
||0.75 (0.15%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Vad’s Catch of the Day
Kaimu’s Sound Money
Deron’s Daily ETF Analysis
Over the past four days, we have been tracking the ProShares UltraShort Oil and Gas ETF ($DUG) for a possible long entry on pullback into the 20-day and 200-day moving averages (see our June 7 ETF commentary). Yesterday, DUG formed the reversal candle we were looking for, as a possible pivot for a buy entry. As a result, we have now placed DUG on our watchlist for potential swing trade entry. Specific entry and exit price details are available to subscribers of The Wagner Daily in the watchlist segment of the newsletter. The daily chart below illustrates the “undercut” with reversal bar we were anticipating:
Yesterday, on a spike in volume, the Direxion Financial Bear 3x ETF ($FAZ) formed a bullish reversal candle. After undercutting support of its 20-day EMA, FAZ rallied sharply and closed at session highs. FAZ now offers a potential long entry just above yesterday’s high of $26.99. We are also placing this inversely correlated “short ETF” on today’s watchlist:
Several days ago, we exited and took profits on our remaining short positions because the broad-based ETFs had finally undercut their 200-day moving averages and formed reversal candles. With the undercut and a reversal candles in place, the odds favored that we would see a bounce in the broad market. Consequently, we suggested patience by sitting in a cash position as stocks bounced and to wait for proper ETF trade setups to develop. Yesterday, all of the major indices put in reversal candles and there are now a plethora of potential short entry setups in the market. As we’ve often discussed, it’s important to wait for ideal setups to develop; otherwise there is a high likelihood of overtrading and churning one’s trading account.
The commentary above is an excerpt from The Wagner Daily newsletter, which we have been publishing since 2002. Subscribers to the full version receive our exact entry and exit prices for swing trades of the top ETF and stock picks, access to our market timing model, and more. To get started today, sign up for your 30-day risk-free trial to our Wagner Daily trading newsletter or visit our swing trading blog to learn more about our proven technical trading strategy.
Cara on the Metalminers
Cara on the International Markets
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report