Bill Cara’s Blog for May 25, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning, Geoff here.
On this Friday before a holiday weekend, traders will be making decisions with the backdrop of the European situation which could have a major effect on the markets. They will not have access to their accounts for 3 days and will act accordingly. A great trader that I knew years ago used to say; “nothing good ever happens on Fridays”. What he meant was that placing large trades on the day before a weekend is inherently riskier, so it is better to wait until Monday to do so. In the current environment, many risk averse traders will be placing hedges that they will take off on Tuesday of next week. Better safe than sorry.
This morning, equity futures are slightly lower, metals slightly higher and the energy complex is mixed. I expect a lower volume day as some traders are taking a 4 day weekend but it could be volatile.
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|
||15.10 (0.79%)||Components, Chart, More|
||21.10 (1.01%)||Components, Chart, More|
||11.64 (0.38%)||Components, Chart, More|
||34.26 (0.54%)||Components, Chart, More|
|^AEX||AEX General||Chart, More|
|^OSEAX||OSE All Share||444.26
||0.30 (0.07%)||Components, Chart, More|
||1.72 (0.56%)||Components, Chart, More|
||18.08 (0.31%)||Components, Chart, More|
||13.69 (0.26%)||Components, Chart, More|
||1.70 (0.19%)||Chart, More|
||4.81 (0.38%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||499.53
||2.99 (0.59%)||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
Stocks ended the session mixed but reversed to close near session highs, for the second day in a row. The Nasdaq showed relative weakness, as it was the only one of the major indices to close lower. The tech-rich index fell 0.4% on the day. The S&P 500 eked out a 0.1% gain, while the small cap Russell 2000 added 0.2%. Both the S&P MidCap 400 and the Dow Jones Industrial Average tacked on 0.3%.
Market internals were also mixed on Thursday. Volume dropped on the Nasdaq by 9.8% and on the NYSE by 11.3%. However, advancing volume edged out declining volume on the NYSE by a factor of 1.3 to 1, while declining volume held the upper hand on the Nasdaq by the same factor of 1.3 to 1. It was not a session indicative of institutional trading activity.
Over the past five sessions, the Direxion Semiconductor 3x Bear ETF ($SOXS), which we recently traded for a 12% gain on a 3-day hold, has held support above its 10-day MA while trading in a tight, 4-point range. Now, a volume-driven move above the five-day high of $50.00 could present a buying opportunity in this inversely correlated “short ETF.” However, we would ideally prefer to see an “undercut” of the five-day low prior to buying $SOXS. Such “undercuts” serve to shake the “weak hands” out of the trade, while at the same time sweeping poorly placed stops. This ultimately increases the likelihood of a profitable trade.
Overall, yesterday’s market action was a tug of war between bulls and bears. Market bulls eventually gained the upper hand by day’s end. If the broad market can rally above the three-day high, the major indices would likely be headed for resistancee of their respective 20-day exponential moving averages. As mentoned several times in recent days, such a bounce could provide low-risk swing trading short setups with a positive reward/risk ratio. Yet, the market has been significantly struggling to gain its footing in an attempt to move higher. We don’t intend on taking new positions until we get the next definitive signal from the market. Nevertheless, we will be monitoring $SOXS for potential re-entry as a swing trade, and will notify subscribers of The Wagner Daily if we buy $SOXS in our model trading portfolio.
NOTE: Just a reminder that the U.S. stock markets will be closed on Monday, May 28 for Memorial Day holiday. As such, The Wagner Daily will not be published that day. Regular publication will resume the following day. Enjoy the long weekend.
Cara on the Metalminers
Cara on the International Markets
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report