These are very tough times to make market prediction on daily basis, given the amount of volatility. The opex thursday would be volatile day of the week and my numbers could be off (especially at the top end). As i start writing this note, ES mini futures are at 1181. For thursday, i see support at 1177. A break of 1173, i would consider bearish. But i do not expect a bearish close tomorrow. Rather we are likely to push up from the lows, to test 1201 first, and very likely higher to 1212-1216 area, which i consider to be the next resistance area.
Short term gold target is at 1808, for thursday. As i write this note, gold futures are at 1796. As gold nears its record highs, i want to bring the stop on it tighter, to yesterday's low area of 1781, up from previous 1772. My guess is that by this weekend, it is going to test and break current record high at 1817.
Wednesday, August 17, 2011
Tuesday, August 16, 2011
Euro alert and gold update
The big news i mentioned in yesterday's email, came out of Europe today, after the meeting between France and Germany. Big decisions have been made at this meeting, to save Euro. My analysis of this news is short term bearish on Euro. I expect Euro to fall within days. As i write this note, spot Euro is around 1.439 and this fall would have broad implications, for other markets.
On a side note, tuesday NY session, gold hit the 1790 resistance, that i gave out in sunday's "gold bubble" message. On monday, it hit the first resistance i mentioned in last sunday's email - 1772 (afterhours NY session). Now, i am moving my stop loss on gold to 1761 from previous 1723 area, locking in a profit on this from the initial call at 1690.
On a side note, tuesday NY session, gold hit the 1790 resistance, that i gave out in sunday's "gold bubble" message. On monday, it hit the first resistance i mentioned in last sunday's email - 1772 (afterhours NY session). Now, i am moving my stop loss on gold to 1761 from previous 1723 area, locking in a profit on this from the initial call at 1690.
Monday, August 15, 2011
Wrap up of monday, aug. 15th
Could some of last week's up move in world markets be explained by the following ?
ECB went on a shopping spree, supporting the global stock markets (atleast my theory, as part of the reason, along with fed policy last week).
I am not buying into the stock rally at these levels. Long term investors are probably sitting on cash for some time, and i see this as speculation driven monday, as value minded investors would have bought 1100 area already. It maybe a good couple of weeks ahead, to start researching on the long term stocks that i want to hold, so i am ready with my cherry picks, if market rally is confirmed. (MMI and NOK provided good example of this today).
The risk aversion shown by bond and gold market has not yet hit the stocks. I think, ECB can not keep up this kind of bond purchases (who is gonna fund it ?) If france and germany agree to fund southern europe this week, and if markets are satisfied with the amount of funding, then we will get confirmation of a sustained rally, within a week. I doubt if the citizens of these countries would keep quiet. I got confirmation for the "bullish move" when ES crossed above 1197 today, but it was not able to close the futures market today, above that level. I would like to wait out a day or two, to get confirmation, considering the important meeting in europe on tuesday. Gold has hit my first level (indicated as 1772 resistance in weekend email), and has to be watched carefully, given the state of turmoil in currencies market.
Sunday, August 14, 2011
Crude Oil update
A circle of friends, who have been getting my views for quite some time now, can attest to the fact that on Sunday, July 24th, i declared "crude oil will peak around101". So, this is the second time this year, that i have made a big call against the big speculators in crude oil, and won. The first was in february, when i expressed my idea that crude will hit support at 84 and bounce up. (Only few of you will know of this prediction). Also during the first call in february, my expectations were exceeded to the upside, because of Libyan war soon after that.
I have not done an update on oil for some time, and wanted to say that i remain bearish crude for intermediate term, with a target near 65. I would consider a bullish view on crude only if it crosses above 89. I do not follow crude oil regularly, due to lack of crude traders, among my friends.
I have not done an update on oil for some time, and wanted to say that i remain bearish crude for intermediate term, with a target near 65. I would consider a bullish view on crude only if it crosses above 89. I do not follow crude oil regularly, due to lack of crude traders, among my friends.
Trading the opex week of august
On thursday (4th)of last week, around midnight, before we all knew that S&P was considering a US downgrade, i sent out the following email to friends:
The timeline worked perfectly, with ES futures seeing their low around midnight on monday. Notice that the previous warning was followed by the weekend email, giving the first support area for the week at 1100-1090.
By following the price movements of the first part of this wild volatile week, and combining the above timeline factor, made thursday and friday a breeze to predict. A light long on thursday when ES reached once more near my support of 1100, provided the best oppurtunity of past trading week.
My bearish long term views remain in force, but the second support area of 1000 - 1015 zone and below may not come into play this week. For the coming week i see resistance in 1192-97 area. Support is at the midpoint of last week's trading range, around 1133. I think we may see another volatile week, in this trading range. I will be trading this range, with a bullish view above this range and a bearish view below this range (keeping in mind, the previous support and resistance areas i have declared in past weeks).
Subj: Timeline for downtrend (Friday, August 5, 2011 12:12 AM)
There is quite a possibility the strong downtrend will continue until tuesday, if my wild guess is correct. I will keep position sizes average to small, until monday close, which reduces risk on either side, since we are close to strong support levels, at the numbers i gave out in the "trading plan". The temporary bounce will provide better oppurtunities.
The timeline worked perfectly, with ES futures seeing their low around midnight on monday. Notice that the previous warning was followed by the weekend email, giving the first support area for the week at 1100-1090.
By following the price movements of the first part of this wild volatile week, and combining the above timeline factor, made thursday and friday a breeze to predict. A light long on thursday when ES reached once more near my support of 1100, provided the best oppurtunity of past trading week.
My bearish long term views remain in force, but the second support area of 1000 - 1015 zone and below may not come into play this week. For the coming week i see resistance in 1192-97 area. Support is at the midpoint of last week's trading range, around 1133. I think we may see another volatile week, in this trading range. I will be trading this range, with a bullish view above this range and a bearish view below this range (keeping in mind, the previous support and resistance areas i have declared in past weeks).
Gold bubble 2011
Gold has been progressing, as expected, ever since i started covering it in July. Some of you have brought it to my notice that other popular technical analysts on the web are predicting a crash in gold starting soon, continuing into next few months. They see gold going below 1500. I am not concerned about the direction of any market, as long as i am able to control my risk/reward in trades. Ultimately this is what determines the success or loss in a trade.
Many analysts are giving target of 2000 and more on gold (note that all top analysts were predicting spx 1425 for 2011 Now they are all scrambling to revise that number). My fundamental analysis supports a gold bubble continuation into 2012. The reason i am not so concerned about short term direction, is because i have firm support resistence levels established for trading. I trade these levels to reduce risk. So, i will change my views on a dime, if my support levels are broken, and that is the point when i will turn direction, and wait for a proper entry back into gold longs. (All of you know that I turned bearish at the right time, on spx). Timing is critical in trading.
Many analysts are giving target of 2000 and more on gold (note that all top analysts were predicting spx 1425 for 2011 Now they are all scrambling to revise that number). My fundamental analysis supports a gold bubble continuation into 2012. The reason i am not so concerned about short term direction, is because i have firm support resistence levels established for trading. I trade these levels to reduce risk. So, i will change my views on a dime, if my support levels are broken, and that is the point when i will turn direction, and wait for a proper entry back into gold longs. (All of you know that I turned bearish at the right time, on spx). Timing is critical in trading.
In terms of odds for profit, you can not get better risk reward ratio than what i am giving you. This is the type of risk reward that major institutions trade on, and smart traders will have the wisdom to understand. I mentioned my desire for 1690 long entry, (when gold was trading near 1665) with target 1826 and higher (2 weeks ago). Upon further research last few days, now i set a target price of 1854.5 for gold futures.
This target is contingent on the following supports holding on gold futures. The first support is 1722 followed by second one at 1714. If this important support zone is broken, then i would turn INTERMEDIATE TERM bearish on gold, with a short target BELOW the 1665 price i discussed in july. I will update the exact short target, upon the break of the support zone i have mentioned. Resistance in the days ahead seems to be at 1772 and 1790.
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