CTA Trading Desk Morning Report
[7:00am ET] Good morning, Geoff here.
The government of Cyprus voted not to allow the theft of depositor’s money to pay for a bailout – I’m sorry, I meant “tax” of depositor’s money. Whether they caved to public pressure, their own conscience or pressure from Russia, we will never know.
We should all be happy for the Cypriots, but these actions have affected how all people think of their bank deposits and will not be forgotten, especially by those in New Zealand who could be facing the same actions in their future. The other good news for Cyprus is that there should be a bump in GDP due to the inflow of Russians visiting their banks. Bloomberg reported that flights from Moscow are at full capacity – I’m not sure how accurate that is, but it sure makes for a good story.
As you know, even when the Fed was hinting at an earlier end to QE than originally anticipated, we were steadfast in our conviction that the end is not at hand. The recent events in Cyprus may close the door on the “bail in” strategy and thus, we remain confident that QE will continue regardless of what the Fed says today.
Why any rational thinking trader would be short gold is beyond the grasp of this humble scribe. Isn’t it clear by now that gold has been and will continue to be a very important investment for the intermediate term? Of course, my opinion doesn’t mean anything to the global gold trade so I must stick to price action.
Gold price is entering another volatility squeeze, so we can look forward to increasing volatility soon:
I have circled the areas where volatility squeezes occurred in the past. You can see that in the majority of the time, price moved in the direction that it was “leaning” when price broke out. Currently, price is leaning on the upper Bollinger Band, but price has not broken out yet and may continue to consolidate within the trading range marked.
Daily Gold Techie:
You can see how important it is for price to break out of the trading box by exceeding $1620. It is getting late in the cycle and I think the bears are pushing down on price hoping to get a move to a new daily cycle low before price moves higher. Should price breakout to the upside, trend measures will switch to UP and the hedge fund shorts will be bailing quickly and price should pop higher.
The fly in the ointment for the bullish case in Gold is the US Dollar which continues to move higher on recent news events that could continue to power the trend. For those bearish the buck, you are very much in the minority. Public opinion on the Dollar is overly optimistic which is a precursor to a top, not a bottom, but we shall see.
You know we are bullish gold. However, as a trader you need price to confirm fundamental analysis. Should price not break out this cycle, probabilities are good that the low is in so it should be only a matter of time. If price breaks down out of the box, the trend will continue to be down. Trade accordingly.
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 |
|---|---|---|---|---|
| ^ATX | ATX | 2,455.02 |  54.02 (2.25%) | Components, Chart, More |
| ^BFX | BEL-20 | 2,604.70 |  3.30 (0.13%) | Components, Chart, More |
| ^FCHI | CAC 40 | 3,790.05 | 14.30 (0.38%) | Components, Chart, More |
| ^GDAXI | DAX | 7,986.89 | 39.10 (0.49%) | Components, Chart, More |
| AEX.AS | AEX General | 354.16 | 2.11 (0.60%) | Components, Chart, More |
| ^OSEAX | OSE All Share | 521.86 | 1.40 (0.27%) | Components, Chart, More |
| ^OMXSPI | Stockholm General | 374.25 | 1.18 (0.32%) | Components, Chart, More |
| ^SSMI | Swiss Market | 7,838.77 | 49.17 (0.63%) | Components, Chart, More |
| ^FTSE | FTSE 100 | 6,446.22 | 4.90 (0.08%) | Components, Chart, More |
| FPXAA.PR | PX Index | 982.63 | 1.68 (0.17%) | Chart, More |
| MICEXINDEXCF.ME | MICEX Index | 1,449.20 | 0.00 (0.00%) | Chart, More |
| GD.AT | Athex Composite Share Price Index | 922.95 | 0.48 (0.05%) | Chart, More |
http://finviz.com/futures.ashx
http://finviz.com/fut_chart.ashx?p=m5&t=ES
http://finviz.com/fut_chart.ashx?p=m5&t=ZB
http://finviz.com/fut_chart.ashx?p=m5&t=DX
http://finviz.com/fut_chart.ashx?p=m5&t=GC
http://finviz.com/fut_chart.ashx?p=m5&t=SI
http://finviz.com/fut_chart.ashx?p=m5&t=CL
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara 100 Company research notes from Seeking Alpha
Adobe Systems (ADBE)
Mar19: 4:39 PM A little more on Adobe: Free cash flow was $261.8M, well above net income of $178M. Marketing Cloud (online ad tech) revenue +20% Y/Y to $215M (21% of total). Digital Media revenue -5% Y/Y and digital marketing +1%, both affected by shift to subscriptions. EMEA was soft, -10% Y/Y. Americas -1%, Asia -1%. Opex +16% Y/Y thanks to cloud software investments. Gross margin was 84.4%, -530 bps Y/Y (due to cost of supporting cloud services)
China Telecom Corp (CHA)
Mar20: 2:59 AM China Telecom (CHA): Q4 net profit -17% to 2.36B yuan ($380M) vs consensus of 2.04B yuan. Revenues +17% to 73.1B yuan vs 73.2B yuan, with wireless data sales boosted by iPhone use. ARPU 53.9 yuan, stronger than expected. Mobile subscribers +8M to 160.6M. To boost capex 40% this year to 75B yuan.
Disney (DIS)
Mar20: 8:39 AM Disney (DIS) says it will distribute an upcoming 3D movie from director Toni Myers jointly with IMAX (IMAX). The partnership will mark the first time the two companies produced an IMAX movie together. Mar19: 11:00 AM Disney (DIS -0.8%) is reported to be working on an app that will allow paying cable/satellite users to stream shows from ABC live to mobile devices. The development could be the next leap forward for “TV Everywhere” as none of the other major broadcasting networks offer the service at the moment.
Juniper (JNPR)
Mar19: 10:01 AM A harsh downgrade to Sell from Goldman sends Juniper (JNPR -4.5%) lower. The firm is worried about share loss and margin pressure in the carrier router space (42% of 2013E sales) thanks to Alcatel-Lucent’s (ALU) 2012 arrival, sees Juniper’s switching share flattening thanks to Cisco’s Nexus 6000 launch and the impact of software-defined networking, and expects “continued share loss” in security hardware thanks to “product feature gaps and the cannibalistic effect on sales from the transition to a software model.” 2013-2015 estimates have been lowered.
Microsoft (MSFT)
Mar19: 1:25 PM More on Microsoft: The WSJ reports the DOJ and SEC are examining allegations from a former Chinese Microsoft rep that he/she was told by a local Microsoft exec to “offer kickbacks to Chinese officials in return for signing off on software contracts.” Also being reviewed are allegations resellers offered bribes to score software deals with the Romania’s communications ministry, and that Italian consultants lavished gifts and trips on procurement officials to win government deals. The probe is said to be in the preliminary stage. 11:33 AM Microsoft (MSFT +0.1%) roundup: 1) Microsoft has acquired NetBreeze, a developer of language/data/text analysis tech. NetBreeze’s tools will provide social media analytics for Microsoft’s Dynamics CRM suite. Salesforce and Oracle also have ambitions in this space. 2) Weak PC forecasts or not, Acer CEO J.T. Wang claims momentum for touch-enabled Windows 8 hardware is picking up. 3) Can you say ‘Surface’ in Mandarin? Microsoft has opened a store on Alibaba’s popular Tmall shopping site. The company’s Chinese profits have long been hurt by widespread piracy.
Schlumberger (SLB)
Mar19: 10:29 AM Oilfield services companies suffer another down day after Schlumberger (SLB -1.3%) sounded an alarm for the sector, warning that customers have reactivated fewer rigs than expected and pricing is still an issue. It was a “clarion call of realism,” Simmons analysts say, virtually ensuring negative Q1 guidance from SLB and making positive revisions from other oil service firms “a steeper climb.” HAL -1.9%, BHI -1.3%.
Silver Wheaton (SLW)
Mar19: 5:42 PM Silver Wheaton (SLW) says attributable proven and probable reserves increased 38% in 2012 to a record ~1.1B silver equivalent oz. consisting of 851M oz. of silver and 4.9M oz. of gold. Attributable measured and indicated resources rose 28% to a record 603M silver equivalent oz. consisting of 529M oz. of silver and 1.39M oz. of gold.
Target (TGT)
Mar19: 1:19 PM Target’s (TGT -0.9%) biggest problem so far in its launch in Canada is empty shelves as shoppers flock to new stores. Execs says the strong store traffic has exceeded expectations, but the supply chain will be adjusted accordingly. Music to TGT investors from a Canadian retail analyst: “Everybody is dying to try the store.”
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