Trade Commodities Futures, Stocks and Options Like a Pro

Week of 27th April 2008, S&P500 and Soybean

2008-04-27T21:28:00.000+08:00

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Stock Index Corner: S&P 500 Daily

S&P 500:

The trend of major Indices continued upward momentum since last week. The 50% retracement of 1416 should be watched very closely. This level seems to coincide with the declining 200 DMA (not shown in chart). So do watch this closely. I also believe this level will be reached as the financial stocks like Goldman Sachs and Citigroup are doing well in its current uptrend move. So this will provide good support for the overall markets.

Outlook:

Big Picture: (monthly): Bullish, and turned Bullish since last week (Monthly MACD turned positive)

Medium term (weekly): Sideway to Bullish (Power Indicator may go higher than previous week's)

Short term (daily): Sideway to Bullish

Fundamental:
Volatility will continue this week cause of Fed meetings and earnings updates.

Major World Indexes

Medium term trend: UK FTSE (UP), Nikkei (UP), Australian ASX (Sideways-UP), Shanghai FXI (UP)

Commodity Corner: Soybean

Technical: The daily pattern appears topish for Soybean. It has reteraced to 50% of the the siginficant top on March 3rd and April 1st this year. Also Double Top formation is forming. So it is quite highly the short term down move will pursue.

Fundamental:
On April 9, 2008, the USDA raised its estimate of 2007-2008 ending stocks from 140 to 160 million bushels, down from 574 million bushels in 2006-2007. The resulting 2008 ending stocks to use ratio is 5%, the lowest in four years. Worldwide, the USDA estimated that 2007-2008 ending stocks will drop from 63 to 49 million tons or 21% of annual use. Brazil and Argentina's soybean crops are only expected to increase slightly in 2008. In 2007-2008, the USDA expects exports to be down 4% and so far, they are down 3% from a year ago.

Trading ideas : (please do your own research and apply your profit/ stops management rules in all trades, please note except options writing, all the other trades may last just several days)

Non Directional Stratgy:

Writing Options: Emini S&P 500 OTM Puts, Soybean Calls
Directional Strategy (leveraged):

Futures: Short Soybean

Stock Options: Long GS calls, Long C Calls, Long AApl Calls.

Week of April 20th, 2008, Nasdaq & Treasury Bonds

2008-04-20T22:35:00.002+08:00

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Stock Index Corner: Nasdaq Composite

Nasdaq Composite:

The trend of major Indices had a major change this week with the big UP day Wednesday and was followed by a huge Gap Up last Friday after Google and some Dow components liek CAT had positive earning surprises. This had confirmed the medium term bullish trend. Good for the stocks. The taking out of stops accumulated near resistance in Feb and early April provided the bulls with the much needed impetus to break thru the resistance and moved higher.

The next upside target would be 2426 (38.3%), then 2510 (50% retracement)

Outlook:

Big Picture: (monthly): Bearish, and may turn to Bullish if the next weekly trend confirms up.

Medium term (weekly): Sideway to Bullish (Power Indicator may go higher than previous week's)

Short term (daily): Sideway to Bullish

Fundamental:
There will be a big number of earnings annoucement coming up this week amd volatility may continue. Large cap high tech companies like Yahoo, AAPL, Amzn, Bidu, MSFT will provide earnings updates.

Major World Indexes

Medium term trend: UK FTSE (UP), Nikkei (Sideways), Australian ASX (Sideways-UP), Shanghai FXI (sideways - down)

Commodity Corner: Treasury Bond

Technical: The weekly pattern appears topish for Bonds, and Daily pattern shows likely short term downtrend for Treasury Bonds.

Fundamental:
Stocks's positive trend may continue to attract money from bond investors as they look for higher returns in equities as the risks in financial markets turmoil appear to be easing. In addition, the inflationary pressure seems to continue and that may be negative for bond prices but positive for treasury yields in the near to medium term.

Trading ideas : (please do your own research and apply your profit/ stops management rules in all trades, please note except options writing, all the other trades may last just several days)

Non Directional Stratgy:

Writing Options: Emini S&P 500 OTM Puts, Live Cattle puts
Directional Strategy (leveraged):

Futures: Short Treasury Bond

Stock Options: Long OIH Calls, Long Bidu Calls, Long Pot calls

Week of 13 April, 2008. S&P 500 & Coffee

2008-04-13T23:28:00.001+08:00

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Stock Index Corner: S&P 500

S&P500:

The S&P 500 daily has briefly passed the resistance at 1386 last week and since then it was bear's glory all week long ! The weekly bearish reversal does not look good for Bulls in the coming weeks. The monthly chart of this week shows a possible shooting star, a significant reversal pattern.

If the support 1260 is broken, then 1170 would be next major support based on 50% retracement of the major trend.

Big Picture: (monthly): Bearish

Medium term (weekly): Sideway to Bearish (Power Indicator may go lower than previous week's)

Short term (daily): Sideway to Bearish

Fundamental:
There will be a big number of earnings annoucement coming up this week and this may increase volaitiltty of the market. Large cap companies like IBM, Citicorp, Google, and Intel will make earnings updates. Itwill be interesting to see how market react to the mews at this juncture.

Major World Indexes

Medium term trend: UK FTSE (Down), Nikkei (Sideways), Australian ASX (Sideways-Down), Shanghai FXI (down)

Commodity Corner: Coffee

Technical: The daily pattern shows likely downtrend for Coffee for the next few days after a strong up trend retracement.

Fundamental:
On December 7, 2007, the USDA estimated 2007-2008 world coffee production at 122.9 million (60 kg) bags with implied use of 126.9 million bags. That puts 2007-2008 ending coffee stocks at 18.3 million bags, or 14% of annual use, the lowest ending stocks since 1961. Brazil's crop was pegged at 37.6 million bags.

Of course, now the market is focused on the next world crop. On April 8, 2008, the government of Brazil predicted their next coffee crop would total 44.2 million (60 kg) bags... much less than most analysts believe. On November 8, 2007, Louis Dreyfus Commodities predicted that Brazil will grow a 50 million-bags of coffee in 2008-2009. A dry fall affected Brazil's flowering stage and added uncertainty to the upcoming numbers.

Note: the above fundamentals are exerpts of dailyfutures.com

Trading ideas : (please do your own research and apply your profit/ stops management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Emini S&P 500 OTM Calls, Gold, Soybean OTM Calls
Futures: Short Coffee

Stock Options: Long GS puts,. Long Goog Puts

Week of 30th March 08, S&P 500, Soybean

2008-03-30T20:24:00.002+08:00

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Stock Index Corner: S&P 500

S&P500:

The latest S&P 500 weekly chart is flashing "bears" are back !! Last week only had one day of UP day on Monday and gave back all its gains over the next several days. The Bulls are in possible trouble and the the medium term downtrend may continue for the next several weeks.

If the support 1260 is broken, then 1170 would be next major support based on 50% retracement of the major trend.

Big Picture: (monthly): Bearish

Medium term (weekly): Sideway to Bearish (Power Indicator lower than previous week's)

Short term (daily): Bearish

Fundamental:
The S&P 500 index exceeded the highs set in 2000, but there are some serious problems to consider. On March 18, 2008, Standard & Poors said that they expect the operating earnings for the S&P 500 companies to have dropped 5.9% in 2007, but be up 16.8% in 2008. Given the problems with subprime mortgages and the slow housing sector, Iraq, Iran, high energy prices, the weak dollar, and big increases in federal spending, the earnings growth estimate for 2008 sounds too good to be true.

Major World Indexes

Medium term trend: UK FTSE (Sideways), Nikkei (Down,), Australian ASX (Sideways), Shanghai FXI (down)

Commodity Corner: Soybean

Technical:The technical picture is getting bearish for the Soy family as a whole. The Soybean May fell to 38.2% level before bouncing back. The daily shows the downtrend may continue for the weekl ahead. THe Corn however has bounced back more strongly than the Soybean, but unlikely it will take out the March 13th's high.

Fundamental:
On March 11, 2008, the USDA reduced its estimate of 2007-2008 ending stocks from 160 to 140 million bushels, down from 574 million bushels in 2006-2007. The resulting 2008 ending stocks to use ratio is 5%, the lowest in four years. Worldwide, the USDA estimated that 2007-2008 ending stocks will drop from 63 to 47 million tons or 20% of annual use. Brazil and Argentina's soybean crops are only expected to increase slightly in 2008. In 2007-2008, the USDA expects exports to be down 8% and so far, they are down 3% from a year ago.

Note: the above fundamentals are exerpts of dailyfutures.com

Trading ideas : (please do your own research and apply your profit/ stops management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Emini S&P 500 OTM Calls, Gold, Soybean OTM Calls
Futures: Short Sugar & Soybean (for very short term play, 3-5 days)

Stock Options: Long BAC Puts, Long FSLR puts

Week of Mar 09, S&P 500 & Corn

2008-03-09T16:50:00.004+08:00

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Stock Index Corner: S&P 500

Last week's bearish action has confirmed that downtrend is continuing and the Jan's low will likely be tested this coming week. if the Jan's low if 1270 is broken, the next support will likely be at 1220, the June 2006's low.

This week, I am also introducing my favorite proprietary Power Indicator which I use to define market top and bottom. It is also very useful in helping me define strength of continued trend. In the chart of S&P 500 above, you can see that Oct 2007 Top has a divergence with the Power Indicator, ie the the market was making higher highs but the Power Indicator was making lower highs...that is one of the most powerful technical signals. Since the divergence, the market has moved lower by about 20% !

The current weekly trend shows the downtrend is picking up steam !! . Look at the Power Indicator again, the red bars are getting longer....The bears are celebrating the falls for sure..!

S&P500:

Big Picture: (monthly): Bearish..

Medium term (weekly): Sideway to Bearish

Short term (daily): Bearish

Fundamental:
U.S. Economy The U.S. Labor Department said that the unemployment rate improved from 4.9% to 4.8% in February while non-farm payrolls declined 63,000. The drop in the number of jobs was weaker than expected and the largest monthly decline in five years. The June U.S. T-bonds closed up a half-point at 117.05/64ths.

In January, the number of non-farm payrolls was revised from down 17,000 to down 22,000. In December, the number was revised from a gain of 82,000 to a gain of 41,000. The December eurodollars were up .13 at 97.765.

The Federal Reserve said that its Term Auction Facility (TAF) will auction $50 billion to banks on March 10th and another $50 billion on March 24th in an effort to provide more liquidity. The auctions were originally set at $30 billion, but the Fed is trying to ease the credit crisis and they also said that they will auction more in the future, if necessary.

Major World Indexes ( No change since last week)

Medium term trend: UK FTSE (Down), Nikkei (Down,), Australian ASX (Down), Shanghai FXI (down)

Commodity Corner: Corn

Technical:The technical picture is getting bearish as the Bearish Reversal appeared on last Friday. The bull run of Corn has began since Nov last year and the upward steam may be easing. The other grains markets like the Soybean, Soybean Meal, and Wheats are showing similar signs of toppishness.

The Commericals COT Index is showing extreme short relative to last 52 week's positions. Possible correction for the Corn in the coming weeks.

Fundamental:
On February 8, 2008, the USDA kept its estimate of 2007-2008 U.S. ending stocks unchanged at 1.438 billion bushels. That puts the 2008 ending stocks to use ratio at 11%, the lowest in four years. On the world scene, the USDA is looking for 2007-2008 ending stocks to fall from 107 to 102 million tons, or 13% of annual use. In 2007-2008, exports are expected to be up 15% and, so far, they are up 15% from a year ago.

On February 22, 2008, the USDA released its projections for 2008-2009. They expect 12.81 billion bushels of production to result in 1.243 billion bushels of ending stocks, the lowest in five years. Of the 13.0 billion bushels of total use they foresee, 4.1 billion bushels are expected to go into ethanol production, up from 3.2 billion bushels the previous year.

Note: the above fundamentals are exerpts of dailyfutures.com

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Emini S&P 500 OTM Calls, Soybean, Corn OTM Calls
Futures: Short Gold (for very short term play, 2-3 days)

Stock Options: Long FSLR Puts, Long ISRG Puts(use ATM options)

Week of March 2nd, 2008, Dow & Gold

2008-03-02T16:38:00.005+08:00

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I am back !! It has been more than slightly a year since my last blog and I'm now settled in my new home Perth, Australia and I intend to make it regular again from now...hope you'll enjoy it.....cheers.

Stock Index Corner: Dow Jones

The Weekly Dow has shown very possible down move from this coming week..for the last 4-5 weeks has been quite even bulls and bear actions and "bulls seem to have lost the battle" !! Last Friday's action make the weekly bar a "shooting star" formation, that spells bearish for the overall market. The Jan low of 11640 is likely to be tested and broken. The Nasdaq composite more bearish actions add to the conviction.

Possible Target for the Dow's down move: 11435

S&P500:

Big Picture: (monthly): Bearish..

Medium term (weekly): Sideway to Bearish

Short term (daily): Bearish

Fundamental:
The S&P 500 index exceeded the highs set in 2000, but there are some serious problems to consider. On February 19, 2008, Standard & Poors said that they expect the operating earnings for the S&P 500 companies to have dropped 4.2% in 2007, but be up 17.7% in 2008. Given the problems with subprime mortgages and the slow housing sector, Iraq, Iran, high energy prices, the weak dollar, and big increases in federal spending, the earnings growth estimate for 2008 sounds too good to be true.

U.S. stocks prospered in the 1980's and 1990's, thanks to three major reasons. Number one is that the U.S. consistently ranked among the top nations of the world in terms of economic freedom (for more about this, read "The Most Important Thing"). Freedom has proven itself to be the crucial ingredient for creating wealth, the source of increased productivity and innovation. Reason number two is the incredible restraint that U.S. federal spending showed in the 1990's. Total federal spending doubled in the 1960's and the 1980's. It even tripled in the 1970's, but in the 1990's, total federal spending only increased by 43%. This belt-tightening in the public sector made more capital available to the private sector, allowing interest rates to fall and equity values to rise. Reason number three was that in the 1990's, the Clinton administration did not fall for the arguments of protectionism and did not see a weak dollar as the key to prosperity.

Major World Indexes

Medium term trend: UK FTSE (Down), Nikkei (Down,), Australian ASX (Down), Shanghai FXI (down)

Commodity Corner: Gold

Technical:The technical picture is stil very positive for Gold. The bull run has accelerated since Sep last year. The medium target is 1080 (Apr futures)

Fundamental:
In 2001, prices were roughly $270 per ounce with a production cost of roughly $160 per ounce. Now in 2007, the production cost is nearly $400 an ounce and the price is over $800. Just as the outlook for gold was too gloomy in 2001, it is now probably too rosy. Much of the credit for gold's rise in the past six years can go to the consolidation that has taken place in the mining industry. In early 2002, Newmont Mining won the right to buy Normandy Mining of Australia for $4.56 billion in cash and stock, becoming the world's largest gold producer. On August 5, 2003, the world's second largest producer, AngloGold Ltd., bought Ashanti Goldfields for $1.09 billion. In 2001, Barrick Gold bought Homestake Mining to become the world's third largest gold mining company and then on October 31, 2005, announced its bid for Placer Dome, the world's fifth largest gold producer. This activity led to more disciplined production decisions at a time when the U.S. economy and the dollar stumbled.

The heaviest burden on gold in the past few years has come from central bank sales. In September of 2004, a new five-year agreement limited sales to 500 tons per year. Potential sellers are Germany, France, Switzerland, Spain, and possibly Italy. On June 14, 2007, the Swiss National Bank said that it will sell 250 tons of gold over the next two years. There is also talk occasionally that the International Monetary Fund may sell gold to provide relief to the creditors of some of the world's poorest countries.

Note: the above fundamentals are exerpts of dailyfutures.com

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Emini S&P 500 OTM Calls, Treasury Bond OTM puts

Futures: Short Feeder Cattle

Stock Options: Long PCP Puts, Long FXI Puts, Long CF Puts (use ATM options)

Week of Jan 28th, S&P 500 & Crude Oil

2007-01-28T20:40:00.000+08:00

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Sorry for the no updates for my blog for last two weeks...cos of my family move to down under, perth, australia as my new home...

Stock Index Corner: S&P 500

The Weekly eMini S&P 500 has shown strong signs of loosing momentum at the peak/ channel resistance and the potential of a correction is imminent. The support for the corrective move may be at 1372 for the completion.

S&P500:
Big Picture: (monthly): Inside Month...still Bullish (but need to watch for the change in weekly trend)
Medium term (weekly): Sideway to Bearish
Short term (daily): Sideway to Bearish

Fundamental:

Earnings season picked up steam last week after starting out sluggishly. But gloomy guidance remains a problem. With 197, or 39%, of the S&P 500 companiesreporting fourth-quarter results,68%have beaten views vs. 17% that have fallen short, according toThomsonFinancial.
That’s in line with recent trends, and it’s a big improvement from early in the week, when the ratio was60%positive to20%negative. “We started out slowly in terms of negative-to-positive surprises, but we’ve seen a turnaround,” saidDirkVanDijk, research director at Zacks Investment Research. S&P500firmsareontracktopost 9.9% profit growth vs. a year earlier,
Thomson said. That includes actual resultsand estimates. Assuming the 61% of companies still due to report beat views by a typical amount, then the S&P 500 should post its 14th straight quarter of double-digit profit growth. Nowthebad news. “Guidance actually has been fairly
negative to date,” saidJohn Butters, a research analyst at Thomson Financial. So far among all U.S. firms, 106 have warned for the first quarter vs. 34 that raised targets. That’s a 3.1 negative-to-positive ratio, well above the typical 2.0. Among S&P 500firms, that ratio is 6.4.

Major World Indexes
Medium term trend: FTSE (Down), Nikkei (UP,), ASX (UP)

Commodity Corner: Crude Oil
Technical:
The technical picture has shown less bearishness relative to few weeks ago. Potential medium term bottom may be in place. Has hit one of the major fibonnaci support at about 50.50 for March corntract.

Fundamental:

March crude oil prices in the past week have rebounded mildly higher from the 1-1/2 year low of $49.90 posted on Jan 28 (G07 contract). Recent bullish factors include (1) President Bush’s plan to start buying 100,000 bpd of crude oil in spring to double the size of the Strategic Petroleum Reserve to 1.5 bln barrels over the next 20 years, (2) the colder weather in the US (which is boosting heating oil demand), (3) technical short-covering, and (4) new kidnappings
by rebels in Nigeria. The latest weekly DOE report showed increased heating oil demand with a 1-month high of 20.4 mln bpd in deliveries from refineries and terminals to customers in the latest week. Other than the demand figures, the DOE report was bearish with a 789,000 rise in crude oil inventories, a +4.0 mln bbl rise in gasoline inventories, and a +750,000 bbl rise in distillate inventories. US inventories remain comfortably above their respective 5-year seasonal averages: crude oil +9.3%, gasoline +3.3%, distillates +7.7%. The market continues to watch whether Saudi Arabia or any other OPEC members are cutting production to implement
promised production cuts.

note: the above fudnamentals are exerpts of IBD and CRB reports.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Emini S&P 500 OTM Calls

Futures: Long Crude Oil
Stocks: VCLK, HMIN

Week of Dec 31st, Nasdaq & Feeder Cattle, Wishing all a Prosperous Year of 2007 !

2006-12-31T22:12:00.000+08:00

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Stock Index Corner: Nasdaq 100
The Weekly Nasdaq 100 is the weakest of all major indices in the US. The last two weeks of divergence of Nasdaq with S&P 500 is seen to be continuing., possibily into the new year.

The first possible support if Nasdaq were to correct further would be the 1715 on the Mar futures, the 0.618 retracement between the recent major hugh and previous major low in July.

S&P500:
Big Picture: (monthly): Bullish (but need to watch for the weekly trend)
Medium term (weekly): Sideway to Bearish
Short term (daily): Sideway to Bearish

Fundamental:

The S&P 500 index continues to consolidate near the top of the July-Dec rally, which took the market to a new 6-year high. Bullish factors continue to include (1) steady US GDP growth, (2) active M&A activity, (3) subdued crude oil prices, (4) optimism about lower US interest rates through 2007, and (5) reasonable valuation levels despite the July-Dec rally in stock prices. Despite the recent favorable news, US stock market investors are still worried about how earnings will hold up in 2007 with weaker GDP growth and how consumers will fare in 2007 with continued high gasoline prices, higher utility bills, and high debt levels. The US holiday
shopping season was on the weaker side of expectations at about +2.0% versus +5.2% growth in 2005. However, the market is looking for decent consumer spending in January.

Major World Indexes
Medium term trend: FTSE (Down), Nikkei (UP, watch out for possible reversal this week), ASX (UP)

Commodity Corner: Feeder Cattle
Technical:
The feeder cattle has moved sideways for the past several weeks and the last two days actions may provide further upside momentum. The commercials are also at the extreme net long positions.

Fundamental:

CATTLE—Feb live cattle prices in the past week rallied sharply to post a new 2-month high. The main bullish factor was the new snow storm moving across the plains which will disrupt cattle supply movement and reduce cattle weights. However, cattle futures prices continue to see pressure from the difficulty of restarting US beef exports to South Korea due to the hyper-sensitive bone chip testing. The Nov Cold Storage report (released Dec 21) was bearish
since it showed that total beef in storage rose to +17.1% yr/yr from +8.3% yr/yr in Oct. The market monthly cattle on feed report released on Dec 22 was mixed with cattle-on-feed falling to 102% of the year-earlier level from Nov’s 104%, but with cattle placed on feed in Nov improving to 92% from 87% and with Nov marketings rising to 106% from 101%.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Feeder Cattle OTM puts
Futures: Long Corn
Stocks: China Telecom CHL, Systemax, Syx

Week of Dec 23rd, S&P 500 & Chicago Wheat, Wishing all a Merry Christmas !

2006-12-25T19:08:00.000+08:00

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Stock Index Corner: S&P 500
Last week, the S&P has shown a weekly reversal pattern and the previous week analysis of potential correction was coming true for both S&P and Nasdaq 100 due to the divergence ie Nasdaq is making lower highs but S&P was making new highs which do not bode well for the markets.

The S&P has also hit the uptrend resistance channel and untl that is broken, the overall picture remains bearish. The MACD has also displayed weaknesses in upward momentum.

In looking forward, it will be a better risk/reward strategy in taking a bearish stand for the indexes and also the US stocks.

S&P500:
Big Picture: (monthly): Bullish (need to watch for the weekly trend)
Medium term (weekly): Sideway to Bearish
Short term (daily): Sideway to Bearish

Fundamental:

Earnings expectations were little changed in the latest week according to Thomson First Call: Q3 (+19.0%), Q4 (9.4%), Q1 (+9.0%), and Q2 (+6.5%). Annual earnings expectations are currently at +15.1% for 2006 and +9.5% for 2007, which would follow 3 consecutive years of double-digit earnings growth (2005 +13.7%, 2004 +20.2%, 2003 +18.4%, vs 25-yr avg of +8.6%). The S&P 500 forward P/E (based on forward-looking earnings) is currently at 16.1
which is mildly below the 3-year average of 16.6 and well below the 10-year average of 19.8, thus keeping the stock market in a fairly reasonable valuation light.

Major World Indexes
Medium term trend: FTSE (Down), Nikkei (UP), ASX (UP)

Commodity Corner: Chicago Wheat
Technical:
The daily and weekly of Wheat has shown high chance of possible uptrend for the next 1-2 weeks. If 576 is broken, it will likely attempt to try the next resistance COP at 583.

Fundamental:

Wheat prices have rallied to a new 2-week high on some technical short-covering but remain in the lower half of the 2-month consolidation range that has developed below the 10-year high posted in Oct. The fundamental backdrop remains bullish due to this year’s much smaller global wheat crop due to drought in Australia, heat in Europe, and drought/heat in the US. However, US wheat exports are running -20% yr/yr due to high US wheat prices.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Wheat OTM puts
Futures: Long Wheat CBT
Stock Options: Long CSCO Puts, Long Goog Puts

Week of Dec 16th, S&P500 & Nasdaq, Tbond

2006-12-16T21:43:00.000+08:00

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Stock Index Corner: S&P 500 & Nasdaq 100
The top chart above shows the comparison of the two major US indices. Do take a closer look at the last 2 weeks market actions and Nasdaq was not as strong as S&P 500 and has not broken it recent high on Nov 23 unlike the big brother S&P 500.

The May-June major correction was preceded by a series of lower high of Nasdaq while S&P was making a series of new highs. Would this repeat in the current bullish climate ?

Do watch closely the development of the two indices for more clues of future actions.

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideway to Moderately Bullish
Short term (daily): Sideway to Bearish

Fundamental:
The S&P 500 index has extended the July-Dec rally to a new 6-year high. The stock market has been supported most recently by the stronger than expected US Nov unemployment and retail sales reports, which have engendered confidence in the US economy and in continued firm earnings growth. The stock market is also being supported by the fact that oil prices have so far remained within their 2-1/2 month trading range and have not rallied above $65 per barrel. Despite the recent favorable news, US stock market investors are still worried about how earnings will hold up in 2007 with weaker GDP growth and how consumers will fare in 2007 with continued high gasoline prices, utility bills, and high debt levels.

Major World Indexes
Medium term: FTSE (UP), Nikkei (UP), ASX (UP)

Commodity Corner: 30 Years Treasury bond
Technical:
The Tbond has hit the one important resistance target of 114-15 and also 0.618 of the retracement with the major high of June 005. It is verr likely the medium term downtrend will pursue.

Fundamental:
The 10-year T-note yield is currently near 4.60%, which is up sharply by 20 bp above the recent 10-month low of 4.40%. The Nov US retail sales report suggested that a relatively strong holiday shopping season is in progress and that there is little spillover consumer pessimism stemming from the weak housing market. The Nov payroll report of +132,000 was stronger than expected and Sep-Oct payrolls were revised higher by a net +42,000. The Nov unemployment rate rose by just 0.1 point to 4.5% from the 5-1/2 year low of 4.4% seen in Oct. The unemployment and retail sales reports convinced market participants that the US economy remains on track with GDP growth in the mid-2% area. The market responded by reducing expectations for Fed tightening by Dec-2007 to 50 bp from expectations as of Dec 1 for a 75 bp cut.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Tbond OTM Calls
Futures: Short British Pound
Stock Options: Long Orcl Puts, Long ALNY Puts

Week of Dec 4th, S&P 500 & Coffee

2006-12-03T22:59:00.000+08:00

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Stock Index Corner: Emini S&P 500
The weekly chart above show that the index is now hovering just above the uptrend resistance line. The daily shows the first lower high since the recovery and rally which started in end July this year. The lower high may signify potential downtrend in the daily short term trend. The traditional strong Dec seasonal may offer potential support for the decline.

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideway to Moderately Bullish
Short term (daily): Sideway to Bearish

Fundamental:

The S&P 500 index is consolidating mildly below the recent 6-year high. The US stock market is carefully watching the weak economic data but has so far been able to hold its gains based on continued optimism about lower interest rates and expectations for slowly improving US GDP growth next year. The stock market is also wary about crude oil prices which have rallied sharply by $5 per barrel in the past 2 weeks. The stock market is also carefully watching the US holiday shopping season, which has so far only seen strength in sale-priced items and electronics. The main issue, however, is how earnings will hold up in the face of continued
weak US GDP growth in the mid-2% area through 2007.

Major World Indexes
Medium term: FTSE (Down), Nikkei (UP), ASX (Down)

Commodity Corner: Coffee
Technical:
The coffee has finally broken one of the major downtrend line as of last friday's close. The next upside target is 135.

Fundamental:

Dec Nybot Arabica coffee prices have extended the Oct-Nov rally to a new 6-month high. Bullish factors sparking that rally center on a dry flowering season in Brazil which, along with the biennial cycle, may cut the Brazilian 2007-08 coffee crop by 28% to only 30 mln bags from 41.5 mln bags in the just-harvested 2006-07 crop. ICO is forecasting the current 2006-07 (Oct-Sep) world coffee crop at 122 mln bags against demand of 117 mln, leaving a small implied surplus of 5 mln bags. However, a coffee deficit may emerge in 2007-08 due to the small Brazilian crop. Large specs had a large long position of 20,029 as of Nov 21.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: OTM Coffee Puts
Futures: Long Orange Juice
Stock Options: Long NTAP puts, Long Affx Puts

Week of Nov 26th, Nikkei 225 & USD Index

2006-11-26T22:13:00.000+08:00

Click to enlarge

Stock Index Corner: Nikkei 225
Both the weekly and monthly of Nikkei are pointing to the possibilities of more decline ahead. The next support would be 15120 and then 14720 if broken.

Do take a closer look the chart of Nikkei's correlation with USD-JPY currencies movement. Since end of 2004, these two markets has seen a close correlation. The strengtening of Yen or weakening of USD may hurt the exporters driven economy of Japan, thus dampening the Japanese stocks.

Do watch closely the movement of USD-JPY to anticipate the future trend of Nikkei.

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideway to Bullish
Short term (daily): Sideway to Bullish

Fundamental:

Earnings expectations were mixed in the latest week according to Thomson First Call: Q3 (+18.9% vs 19.0% in the prior week), Q4 (+9.6% vs 9.8%), Q1 (unch at +9.0%), and Q2 (+6.5% vs 6.9%). Annual earnings expectations are currently at +15.0% for 2006 and +9.4% for 2007, which would follow 3 consecutive years of double- digit earnings growth (2005 +13.7%, 2004 +20.2%, 2003+18.4%, vs 25-yr avg of +8.6%).

Major World Indexes
Medium term: FTSE, Nikkei, ASX - Down (bearish).....Nikkei is the weakest index at this junture.

Commodity Corner: USD Index

Technical:
The technical pictur eof USD index looks set to decline further. Next support would be 82.07 and 80.39 if prior support is broken.

Fundamental:
The dollar/yen has fallen to a new 2-month low and euro/dollar has rallied to a new 6-month high. The dollar has been undercut by the recent weak US economic data (consumer confidence, housing starts), concerns that the Chinese central bank may step up its dollar reserve diversification program, underlying concerns about the continued massive US trade deficit and the outflow of dollars from the US, and technical weakness. US interest rates remain well above European and Japanese rates, but US interest rates are pointed lower while European and Japanese rates are pointed higher. The market is still unanimously expecting the European Central Bank to raise its refi rate by 25 bp to 3.50% at its next meeting on Dec 7 and to raise the refi rate by another 25 bp rate hike to 3.75% by March 2007. The market is discounting a chance of a BOJ rate hike by the end of 2006 but is fully discounting
that rate hike by the end of Q1.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: USD OTM Calls
Futures: Long Lumber
Stock Options: Long Qcom calls, Long ATI calls

Week of Nov 19th, S&P 500 and Corn

2006-11-19T21:40:00.000+08:00

Click to enlarge

Stock Index Corner: S&P 500
The weekly of S&P has formed a higher low and turned bullish and now possibly moving towards 1424 as the next target.

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Bullish
Short term (daily): Bullish

Fundamental:

The S&P 500 forward P/E (based on forward-looking earnings) is currently at 15.94 which is
moderately above the recent 11-year low of 14.27 posted in mid-June but still keeps the stock market in a fairly reasonable valuation light.

Major World Indexes
Weekly MACD Histogram (Medium term): FTSE, NikkeiASX - Down

Commodity Corner: Corn

Technical:
Corn is the most bullish grain commodity and has risen more than 50% in the last 2 months. The daily is showing some tehnical weakness and may decline to 345 for Dec futures.

Fundamental:

The USDA report on Nov 9 failed to give the market any fresh bullish impetus and the market
is now being weighed down by harvest pressure and long liquidation pressure by large specs. Since this year’s corn crop is nearly in the bin (90% harvested) and weather has ceased to be a factor, the question is whether there will be enough corn from this year’s crop to meet strong usage demand. So far, export demand has been holding up despite high prices, which means that prices will need to remain high enough to draw out 53% of the corn in inventories. Thus, even if corn prices fall on some long liquidation pressure, the decline is not likely to go very far due to the tight supply situation for this year and next year.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Naural Gas OTM Puts
Futures: Short Cotton
Stock Options: Long Apple Calls, Long Orcl calls

Week of Nov 5th, S&P 500 & Crude Oil

2006-11-05T21:28:00.000+08:00

Click to enlarge

Stock Index Corner: S&P 500

The daily of S&P500 has declined for six sessions in a row after hitting the Fib Op target of 1381. If last friday low is taken out, then we will have a lower high formed on the daily, a downtrend definition. The next possible support will be 1336.

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideways to Bearish
Short term (daily): Sideways to Bearish

Fundamental:

More recently, stock prices were bolstered by very strong Q3 earnings. However, the earnings season is now winding down and the market appears to be suffering from some fatigue, particularly in light of the recent weak US economic data. While Q3 earnings were very strong at +17.4%, the market is looking for a downshift in earnings growth to mediocre single-digit levels in the first half of 2007. In that environment, the stock market will need some fresh bullish factors such as even lower interest rates or crude oil prices in order to prevent a correction from developing.

Major World Indexes
Weekly MACD Histogram (Medium term): FTSE, Nikkei - DOWN (Bearish), ASX - still UP (very likely to top and decline like other major indexes)

Commodity Corner: Crude Oil

Technical:
The Crude Oil (CL Dec) has found a nice bottom at 57.5. The market may go sideways for the 1-2 weeks re attempting to move higher. First resistance at 62.3. Support at 56.3.

Fundamental:

US inventory levels have fluctuated in volatile ranges over the past month due to refinery shut-downs for the switch-over to winter products. The latest weekly DOE report was mixed with an increase of 1.9 mln bbl in crude oil inventories offset by a sharp -2.8 bbl decline in gasoline inventories and a -2.7 mln bbl decline in distillate inventories. The refinery operating rate rose sharply by 2.7 points to 88.9% as refineries get past their seasonal shut-downs. US inventories are still plentiful vs their seasonal 5-yr averages at 9.6% for crude, 3.0% for gasoline, and 13.3% for distillates.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Gold OTM Puts
Futures: Long Rough Rice
Stock Options: Oracle (long puts), SLB (long calls)

Week of Oct 29th, Dow & Cotton

2006-10-29T21:15:00.000+08:00

Click to enlarge

Stock Index Corner: Dow Jones Industrial

The daily of Dow Jones is a a few points away from Fib OP target....The daily may correct to first support level of 11737 (not shown).

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideways to Bullish
Short term (daily): Sideways to Bearish

Fundamental:
The earnings calendar remains very busy this coming week (Oct 30 to Nov 3) with 83 of the S&P 500 companies due to report, following last week’s peak of 155 companies. Changes for earnings expectations were mixed in the latest week: Q3 (+15.9% vs +13.9), Q4 (+11.4% vs +11.7%), and Q1-2007 (+8.8% unch wk/wk), and Q2 +6.7% vs +6.4%), according to Thomson First Call. Annual earnings expectations are currently at +14.5% for 2006 and +9.7%
for 2007, which would follow 3 consecutive years of double-digit earnings growth (2005 +13.7%, 2004 +20.2%, 2003 +18.4%, vs 25- yr avg of +8.6%).

Major World Indexes
Weekly MACD Histogram (Medium term): FTSE, Nikkei, ASX - UP (Bullish) , do watch closely the influence of S&P500 and the Nasdaq's directions over next several weeks...

Commodity Corner: Cotton Dec
Technical:
The daily Cotton has found an bottom and possibily moving up for the next several days. Next resistance: 52-53

Fundamental:

Dec cotton has rebounded mildly higher in the past week, finally showing some spillover strength from beans and grains. Cotton continues to be depressed by weak export demand
and by hedge pressure from the incoming crop. Cotton prices are weak despite this year’s sharp -13.5% yr/yr drop in the crop size and -17% yr/yr drop in US carry-over. Cotton is 44% harvested, 1 point ahead of the 5-yr avg of 43%.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)
Writing Options: Cotton OTM Puts
Futures: Long Cotton (dec)
Stock Options: CSCO (long puts), Teva (long puts)

Week of Oct 22nd, Nasdaq & Soybean Meal

2006-10-23T19:34:00.000+08:00

Click to enlarge

Stock Index Corner: Nasdaq 100

The weekly of Nasdaq 100 (Dec Futures) has shown some weaknesses in upside momentum..The daily may correct to first support level of 1680. This may exter some pressure of the big brother S&P 500.

The volatility may still be high in the next few weeks as earnings seasons is still in place.
Oct 25th is significant as FOMC mtg may surprise the markets in its decision.

FOMC expectations—The market is still unanimously expecting no change in Fed policy at the next FOMC meeting on Oct 24. The market now believes there is virtually no chance for a Fed easing through March 2007. The market is discounting an 80% chance of a 25 bp rate cut by August 2007, down from 100% a week earlier.

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideways to Bullish
Short term (daily): Sideways to Bearish

Do note that next few weeks of US corporate earnings annoucement may increase volatility of the markets.

Major World Indexes
Weekly MACD Histogram (Medium term): FTSE, Nikkei, ASX - UP (Bullish)

Commodity Corner: Soy Meal Dec
Technical: The Soy Meal has it its XOP at 182. Daily may correct to 178.

Fundamental: The USDA is projecting a 3.3% increase in this year’s soybean crop and a 7.8% increase in the US carry-over, meaning there are plenty of beans to satisfy demand. Soybeans are now 69% harvested, 4 points ahead of the 5-yr avg of 65%.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)
Writing Options: Orange Juice OTM puts
Futures: Short Soymeal Dec
Leap Options: AMGN (long calls), BCE (long puts)

Week of Oct 15th, ASX & Rough Rice

2006-10-16T22:06:00.000+08:00

Click to enlarge:

Stock Index Corner: Australian All ordinary Index
This market has found a stong bottom and has moved up strongly since. The upside momentum looks set to continue.

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideways to Bullish
Short term (daily): Bullish

Do note that next few weeks of US corporate earnings annoucement may increase volatility of the markets and also some key economic data are released this week: CPI, PPI, Housing starts.

Major World Indexes
Weekly MACD Histogram (Medium term): FTSE, Nikkei, ASX - UP (Bullish)

Commodity Corner: Rough Rice

Technical:The daily of Rough Rice presents good setup for the shorts. The first likely support is 954 (Nov futures)

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)
Writing Options: OTM Soy Meal Puts
Futures: Short Rough Rice
Stock Options: EXPE (long calls), EXPD (long calls)

Week of Oct 8th, Live Cattle & Nikkei 225

2006-10-08T22:09:00.000+08:00

click to enlarge

Stock Index Corner: Nikkei 225
The Nikkei is playing catching up with the S&P500, and the technical strength is showing more upside potential. Next targets: 16710 & 17490 (Dec futures)

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideways to Bullish
Short term (daily): Possible move to the down side for the next several days

Do note that next few weeks of US corporate earnings annoucement may increase volatility of the markets.

Major World Indexes
Weekly MACD Histogram (Medium term): FTSE, Nikkei, ASX - UP (Bullish)

Commodity Corner: Live Cattle
Fundamental (source: CRB):

CATTLE—Oct live cattle prices continue to consolidate in the
lower half of the early-Sep sell-off, which was prompted mainly by
seasonally weak demand and technical long liquidation pressure
(after the extended 30% rally seen since May). The market is
watching for progress on getting US beef shipments going to South
Korea, after South Korea announced on Sep 8 that it would end its
3-year ban on US beef. Japan dropped its ban on US beef this past
summer and shipments to Japan are off to a good start. The Sep 22
Cattle on Feed report was bearish with Aug cattle placements rising
to 137% of the year-earlier from 117% in July. The Sep 1 cattle on
feed number was 110% of the year-earlier level, up from 107% on
Aug 1.

Technical:
The weekly of Live cattle is showng weakness and possible down moves in the next 1-2 weeks.
Possible downside target: 87 (Dec futures)

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)
Writing Options: Soy Meal OTM puts
Futures: Short TBond
Stock Options: Google (long calls), OMX (long calls)

Week of Oct 1st, S&P500 & Dollar Index

2006-09-30T20:37:00.000+08:00

click to enlarge

Stock Index Corner: S&P 500

Fundamental (source: CRB):
Earnings expectations were unchanged in the latest week: Q3
(+14.2%), Q4 (+13.7%), and Q1-2007 (+10.4%), according to
Thomson First Call. Annual earnings expectations are currently at
+14.7% for 2006 and +10.2% for 2007, which would follow 3 consecutive
years of double-digit earnings growth (2005 +13.7%, 2004
+20.2%, 2003 +18.4%, vs 2-decade avg of +7.5%). The S&P 500
forward P/E (based on forward-looking earnings) is currently at
15.36 which is just moderately above the recent 11-year low of
14.27 posted in mid-June and keeps the stock market in a reasonable
valuation light.

FOMC expectations—For the first time in this cycle, the market
has completely erased expectations for any further tightening and is
now only discounting rate cuts going forward. The market is discounting
no chance of a rate cut at the next FOMC meeting on Oct
24, but the market is discounting a 34% chance of a 25 bp rate cut
by Jan-2007 and a 100% chance of a rate cut by June-07. The market
is discounting a 78% chance for a further 25 bp cut by Aug-07.

Technical:
S&P500 has outperformed all major indexes (Nikkei, FTSE, ASX) for the past 2-3 months and made a new 5 yrs high last week. The bullish momentum is strong. However, on daily timeframe, a corrective move is expected in the next few days to reach 1332 support and if broken, potential next support at 1320. Next resistance at 1369 (Dec futures).

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideways to Bullish
Short term (daily): Possible move to the down side

Major World Indexes - Weekly MACD Histogram: FTSE, Nikkei, ASX - UP (Bullish)

Commodities Corner: US Dollar Index

Fundamental (source: CRB):
The dollar index temporarily fell but then rallied back on the improved
US economic data seen in the Sep US consumer credit report
and Aug new home sales report. Bullish factors for the dollar
continue to include the rally in the US stock market to a new 5-year
high (which attracts capital to the US), signs of some improvement
in the US economic data from the drop in gasoline prices and mortgage
rates, and the fact that US interest rates remain well above
overseas rates, even though US rates are now pointing downward
while foreign rates are pointing upward. The market is fully expecting
a 25 bp rate hike to 3.25% from the ECB on Oct 5 and a
further 25 bp rate hike to 3.50% in December. Meanwhile, there is
about a 50-50 chance for a BOJ rate hike to 0.50% by year-end.

Technical:
The USD Index has moved sideways for the past five months between 84 and 86.
It may continue to do so in the next few weeks.

Trading ideas : (please apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: US Dollar Index OTM Puts
Futures: Short Dec Cotton
Options: ADBE (long puts), QCOM (long outs)

Week of Sep 24th, Nasdaq and Orange Juice

2006-09-24T22:53:00.000+08:00

click to enlarge

Stock Index Corner: Nasdaq 100, the chart above showed that last Thursday hit the Op and 0.618 fib node. There is now a high possibility for the down move in the subsequent weeks if the weakness persist. The Sep month is ending and comes Oct. The Oct month has also been the best month according to the Almanac. My view is that the seasonal pattern may have shifted in the last 2 months where Sep was supposed to be one of the worst month of the year but did not happen. So, Oct may bear the "pressure" this year....we'll see..

S&P500:Big Picture: (monthly)... Potential major Turning Point this month to the downside..
Medium term (weekly): Sideways to downside
Short term (daily): May move to the down side (look for lower high)
Weekly MACD: FTSE, Nikkei, ASX - DOWN (Bearish), SPX/ Nasdaq still UP (but watch closely as it has almost reached the May high (resistance) this year.

Commodities Corner: Orange Juice

Fundamental: (Source: CRB) Nov orange juice prices have faded for the
past 4 weeks as 3 successive hurricanes have turned north near Bermuda
and have not even approached Florida. The market is looking
for another small Florida harvest in 2006-07 due to the 2-years of
hurricane damage to trees, the spread of citrus canker and greening
disease in Florida, and urban sprawl. The USDA on Oct 12 will
release its first official estimate of the 2006-07 season, with the
Florida crop expected to be in the 140-150 mln box area, which
would be little changed from the poor crops seen in the last 2 years.
Large specs still had a large long position of 12,462 as of Sep 12
(42% of OI).

Technical: Weakness in OJ is seen on the daily and weekly, high possibility of continued downtrend in the coming weeks...near term support: 159.0

Trading ideas : (please apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Orange Juice OTM Calls
Futures: Short OJ
Options: NVDA (long puts)

Week of Sep 18th, FTSE100 & Tbond

2006-09-17T23:11:00.000+08:00

click to enlarge

Stock Index Corner: FTSE100
The London FTSE has indicated more bearish bias than other major indexes. This was due to the sluggishness and bearish tone of oil and mining resource companies in UK in the last several weeks.

The uptrend line was broken last week and may pose a bit problem for the bulls. The medium downside target is 5625.

S&P500:
Big Picture: (monthly)... Potential major Turning Point this month to the downside..
Medium term (weekly): Sideways
Short term (daily): May have one more upside to test the resistance of May high
Weekly MACD: FTSE, Nikkei, ASX - DOWN (Bearish), SPX still UP (but watch closely as it has almost reached the May high (resistance) this year.

Commodities Corner: Treasury Bond, 30Yrs
Fundamental: (Source: CRB)

T-note prices remain near the top of the rally that has been driven by a weaker economy and a halt in the Fed’s tightening process. The recent plunge in oil prices is also bullish for T-note prices since the headline CPI inflation statistics will be able to ease in the next several months, although lower oil prices also mean a stronger economy and a somewhat greater threat
from core inflation. The market is almost unanimously expecting the FOMC at its meeting on Sep 20 to leave the funds rate target unchanged at 5.25%. The minutes from the last FOMC meeting on Aug 8, when the Fed halted its 2-year tightening regime, showed that all the FOMC members except one (Lacker) were on board for the pause.

Technical:
Weakness in Tbond is seen on the daily and weekly, high possibility of reversal in the coming weeks...

Trading ideas : (please apply your risk management rules in all trades)
Writing Options: Coffee OTM Calls
Futures: Long Sugar, Short 5 Year Tnote/ Tbond, Long USD Index
Stock Options: AMD (long puts), GM (long puts)

Week of Sep 10th, Nikkei & Crude Oil

2006-09-10T21:23:00.000+08:00

click to enlarge

Stock Index Corner:Nikkei

Nikkei index has risen for 7 weeks in a row and the bullish tone seemed subdued las tweek. The Bearish reversal pattern is being formed and may trend down for the next several weeks if confirmed by the lower trend in the next few days. So do watch out closely.

The Nikkei is still correlating closely with other major markets like the S&P, Nasdaq and FTSE. So i would expect similar trend for these markets as well.

The likely next support for NK Dec: 15490

S&P500:
Big Picture: (monthly)... Back to Bearish ..(Monthly MACD turns down)
Medium term (weekly): Sideways to Bearish
Short term (daily): Sideways to Bearish

Weekly MACD: FTSE (1st market to move Down- bearish), SPX Nikkei, ASX - still UP (but may likely follow FTSE in the coming week)

Commodities Corner: Crude Oil

Fundamental: (Source: CRB)
Front-month crude futures oil prices have extended the 1-1/2 month sell-off to a total of $11 per barrel, posting a new 5-month low. Bearish factors include (1) the lack of progress at the UN Security Council on pressuring Iran to halt its nuclear program (which reduces the chances of an oil backlash by Iran), (2) the recent news that Chevron and its partners are optimistic about having found a new huge source of oil in the deep waters in the Gulf of Mexico (although it will take several years to fully develop), (3) the end of the US summer driving season, (4) the quiet US hurricane season thus far, and (5) plentiful US crude oil inventories and adequate US
gasoline inventories. The latest DOE weekly inventory report was bearish with a sharp 3.1 million rise in distillate inventories.

Technicals:
Quarterly Chart chart (above) shows sharp bearish reversal downtrend driven by poor fundamentals and next possible support is 59-60 (CL Oct Futuers)

Trading ideas : (please apply your risk management rules in all trades)
Writing Options: Crude Oil OTM Calls
Futures: Short Live Cattle, Short Lean Hog
Stock Options: SLB (long puts), Qcom (long puts)

Week of Sep 3rd: S&P and Soybean

2006-09-03T12:49:00.000+08:00

click to enlarge:

Stock Index Corner: S&P500

Fundamental

The S&P 500 forward P/E (based on forward-looking earnings) is currently at 14.95 whichis just mildly above the recent 11-year low of 14.27 posted in mid-June and keeps the stock market in a reasonable valuation light.

Technicals:

S&P stock index is still in a bull trend, indicated by the weekly MACD Hist. The corrections in the last few days after hitting COP 1303 level have not created any significant change in the medium term trend.

Next target is 1320 (Sep Futures) if it stays above 1300 this coming week.
Nasdaq has been outperforming the S&P for the last 3-4 weeks in percentage gains. This may help the broadmarket to sustain the current level for the bullish bias trend.

Big Picture: Long Term has changed (monthly)... Bullish....(The May low is now the higher low on the monthly chart). The traditional seasonal weakness in September may not eventualise. The May/June corrections could have been the weakest trend of the year. We shall see if this is true.

Medium term (weekly): Bullish

Short term (daily): Bullish bias

Weekly MACD: FTSE, SPX Nikkei, ASX - still UP (bullish)

Commodities Corner: Soybean

Fundamental: (Source: CRB)
SOYBEANS—Nov soybean prices in the past week fell another
notch to a new 18-month low, thus extending the summer plunge to
about 70 cents per bushel (-11%). The USDA’s Aug crop report
showed a -5.1% yr/yr decline in the soybean crop and a -12.6% decline
in the US carry-over. However, the weather during the critical
August pod-filling season has been ideal and the USDA will undoubtedly
revise its crop size and carry-over figures higher. Indeed,
soybean’s good-to-excellent rating appears to have bottomed
out and has moved higher by 6 percentage points in the past 3
weeks to 59%. Large specs had a large short position of 41,425 as
of Aug 22. Soybean summary: 2006-07 crop 2.928 bln bushels
(-5.1% yr/yr), 2006-07 US carry-over 450 mln bushels (-12.6% yr/
yr), 2006-07 global carry-over of 49.970 MMT (-6.5% yr/yr).

Technicals:

Monthly chart (above) showing continued downtrend driven by poor fundamentals and next possible support is 476 (S Nov futures)

Trading ideas : (please apply your risk management rules in all trades)

Writing Options: Soybean OTM calls

Futures: Short Orange Juice, Short Bean Oil

Stock Options: OIH (long call), EXPE (long call)

Week of Aug 27th, S&P and Sugar

2006-08-27T20:45:00.000+08:00

Click to enlarge:

Stock Index Corner:
S&P500: S&P stock index is still in a bull trend, indicated by both the weekly MACD Hist. The corrections in the last few days after hitting COP 1303 level have not created any significant change in the medium term trend. The strong support is at abt 1280 level (Sep Futures).

Next target is 1319 (Sep Futures) if it stays above 1280 this coming week.

Nasdaq has been outperforming the S&P for the last 2-3 weeks in percentage gains. This may help the broadmarket sustain the current level for at least a sideway to bullish bias trend.

Fundamentals:
Q2 earnings season is now virtually complete with only a few S&P 500 companies left to report. Earnings expectations in the latest week were little changed for Q2 (+16.3%), Q3 (+14.9%), Q4
(+14.6% ), and Q1-2007 (+10.5%), according to Thomson First Call. Expectations for 2006 earnings growth of +14.9% would mark the 4th consecutive year of double-digit earnings growth (2005 +13.7%, 2004 +20.2%, 2003 +18.4%, vs 2-decade avg of +7.5%). The S&P 500 forward P/E (based on forward-looking earnings) is currently at 14.86 which is just mildly above the recent 11-year low of 14.27 posted in mid-June and keeps the stock market in a reasonable valuation light.

Big Picture: Long Term has changed (monthly)... Bearish....(The May low is now the higher low on the monthly chart). The traditional seasonal weakness in September may not eventualise. The May/June corrections could have be the weakest trend of the year. We will see if this is true.

Medium term (weekly): Weekly Bullish
Short term (daily) : Daily - Sideways to bullish bias
Technicals: FTSE, SPX Nikkei, ASX Weekly MACD Histogram (WMH) - still UP (bullish)

Commodities Corner:
Sugar
It has trended down nicely since early July from 17.25 (S Oct), but prices stabilized in the past week following the sharp 2-month sell-off to an 8-month low. Bearish factors include long liquidation pressure, weakness in ethanol and crude oil prices, and Brazil’s incoming center-south cane harvest (which is nearly one-half complete). Longer-term fundamentals have turned slightly bearish since the market is now forecasting a small surplus for 2006-07 (Oct-Sep) after three straight years of deficits as production picks up in response to high prices.

Technicals: It has touched a significant 0.682 level support (12.20) and also the XOP of 11.94 (agreement). High chance that there will be a rebounce at that level.

Trading ideas :(please apply your risk management rules in all trades)
Writing Options: Cotton (OTM Puts)
Futures: Short Australian dollar, Long Sugar
Options: TLAB (long call), SNDK (Long call)

Week of Aug 20th, NK225 & S&P500

2006-08-20T22:04:00.000+08:00

Click to enlarge:

S&P500: S&P is now in a bull trend, confirmed by both the weekly and monthly MACD Hist.
Next target is 1329 (Sep Futures) if it stays above 1298 this coming week. The interest rate hike fear is out of the way and investors are focusing on earnings picture which most of the S&P 500 companies are performing better than expected.

Nasdaq is not shown above, but seminconductor sector leads the Nadsdaq recovery. The strong rally last week may continue in the following weeks and provide more upside potential for the broadmarket.

Nikkei 225:
Nikkei is enjoing the bull trend since middle of June and looks likely to continue.

Big Picture: Long Term has changed (monthly)... Bullish....(The May low is now the higher low on the monthly chart.

Medium term: Weekly Bullish

Short term: Daily Bullish

Technicals: FTSE, SPX Nikkei, ASX, Weekly MACD Histogram (WMH) - still UP (bullish),

Trading ideas :(please apply your risk management rules in all trades)
Writing Options: Coffee (OTM Puts)
Futures: Short Lean Hog, Short Feeder Cattle
Options: SLB (long calls), SIRI (Long calls)

Week of Aug 6th, Tbond and S&P

2006-08-06T21:40:00.000+08:00

Click to enlarge:

Tbond:
The Sep Tbond has rallied for the past 6 weeks anticipating pause of Fed fund hikes.
Technically, the Tbond has more room to move on the upside, but this coming week may give the bulls a chance to take a breather..The FOMC mtg may give it a another rally, and 110-23 is the next target.

S&P500: The market as anticpated had rallied last week but last friday's actions spell trouble for the bulls.....The buy stops placed by all the shorts in the last 2-3 months have been "cleaned up", ie "wash and rinse" which means the market is now healthier for the shorts....if coming monday closes lower than the last friday's low, this may give us high possibility of next down move..

Big Picture: Long Term has not changed (monthly)... Bearish....(possibility forming lower high on the monthly chart....)
August has been known as the worst S&P month in the last 15 years..(Stock Almanac, Hirsch)

Medium term: Weekly, though technically bullish, but directional pattern indicates otherwise, bearish bias...

Short term: Bearish...

Technicals: In order of bullishness, FTSE, SPX Nikkei, ASX, Weekly MACD Histogram (WMH) - still UP (bullish), but may turn down this week.....

Trading ideas :(please apply your risk management rules in all trades)
Writing Options: Tbond (OTM puts)
Futures: Long Live cattle
Options: SBC communication, T, (long call)

Week of July 30th, Nikkei, S&P500 and Nasdaq 100

2006-07-31T13:09:00.000+08:00

click to enlarge

Nikkei 225:
The Nikkei has formed an intermidiate low since 6 weeks ago and last week action confirmed this observation, forming a higher low (weekly) . Next target is 16100 on the Sep Futures.

S&P500:
Similar to Nikkei. Next taregt is 1290-1298.

Nasdaq 100:
This is the most bearish of the indexes and last friday's rally by led by technology/ seminconductor sector's huge gain of 4-5% may provide further momentum to the upside of the major indexes. Next target will be 1568.

Big Picture: Long Term has not changed (monthly)... Bearish
Medium term: Weekly, Bullish ...
Short term: Bullish
Technicals: FTSE, Nikkei, ASX, S&P's Weekly MACD Histogram (WMH) - UP (bullish)

Trading ideas :(please apply your risk management rules in all trades)
Writing Options: Tbond (OTM puts)
Futures: Long Tbond
Options: ATI (Long call)

Week of July 16th: Seasonals and S&P's Possible Support

2006-07-16T22:30:00.000+08:00

Click to enlarge

Seasonals: what is it ?
Seasonality may be defined as a market’s natural cycle, an established tendency for prices to move in the same direction at a similar time every year. Annual cycles of demand and supply give rise to seasonal price phenomena especially for commodities like grains and energy, etc.

i. Dow Jones (DJIA):
The above seasonal chart for Dow does not look good at all in July, starts declining sharply in mid July before rebounding into Aug. Note that seasonal charts does not tell us how many points would the index drop but it just shows the strength of the pursuing trend at any time of the year. Mathematicaly, it is just a point estimate at any give time over 5 years, 15 years, or 20 years if data is avaialble.

ii. Nikkei
Similar to Dow, sharp decline is expected in July, showing intermediate bottom in early Aug.

I hope the readers new to seasonal topic have learnt some of the important factors affecting markets....!

iii. S&P500 (Where would it go next, i mean the support ??)
The last chart Weekly SPX cash index, shows some key possible support at 1210, about 25 points away from where it closed last friday at 1236. Further down the path is 1162.

I would anticpiate some "wash and rinse" at 1210....ie stops placed below 1219 are "cleaned up" before having some short term rebounce and then move towards 1162.

With the additional seasonal influence and the current negative political climate around the world, these levels are not impossible to reach...

Big Picture: Long Term has not changed (monthly)... Bearish....
Medium term: Weekly, bearish ...
Short term: Some short term rebouce possible in early of the week to clear some oversold levels before continuing the downtrend this coming week, in sync with the medium and long term downtrend

Technicals: FTSE, Nikkei, ASX, S&P's Weekly MACD Histogram (WMH) - DOWN (bearish)

Trading ideas :(please apply your risk management rules in all trades)
Rolling Options: Sell OTM calls on S&P, Sell OTM puts on Cocoa..
Futures: Long Rough Rice
Stocks Options: AES (long calls), CMCA (long puts)

Good trading !

Week of July 9th, S&P and Nasdaq (They are not enjoying the "party" together..)

2006-07-10T01:09:00.000+08:00

Click to enlarge...

S&P 500: The last 2-3 weeks rally may have run its course.....It could not rally above 1298, one of the key fibnode level (0.68 of the major corrective wave) ...a sign of weakness..

Nasdaq 100: The above charts show some real problems for the Nasdaq 100 stocks, and it only touched 0.382 of the major corrective wave and clearly weaker than its big brother S&P. This is also a sign of divergence, similar to late April to early May pattern, where Dow Jones/ S&P were moving to new high but Nasdaq were trending lower instead.....The Nasdaq weakness may just pull down the big brother along....this can be an important sign of the impending down move of the broad market....the coming earnings quarter may be the catalyst for the next big move...the question is: North or South.....?

Big Picture: Long Term has not changed (monthly)... bearish....

Medium term: MT trend may change to bearish bias...Position to sell short on the recent stock rallies....

Short term: Downtrend may start its course the coming week, in sync with the medium and long term downtrend

Technicals: FTSE, Nikkei, ASX, S&P's Weekly MACD Histogram (WMH) - Up (But this coming week WMH may have high possibility to turn down in line with the long term downtrend...keep a real close watch...!.)

Trading ideas :(please apply your risk management rules in all trades)

Rolling Options: Sell OTM calls on S&P, Sell OTM puts on Bean Oil..

Futures: Long Treasury bond, Short Orange Juice

Stocks Options: Cat (long puts), ATI (long puts)

Week of June 25th, Nikkei and S&P500

2006-06-25T19:14:00.000+08:00

Click to enlarge

Nikkei:
The actions in the last one week has been most impressive vs other major indices. Daily higher low (uptrend) was confirmed on thursday with almost 500 points up. The current level is still far from the 50 days MA (stretched), possibly providing more room for the upmove until some stability is seen. Two possible targets for the upmove if continued: 15430 and 16028 (Sep futures)

The Weekly MACD Hist has finally turned up after 8 solid weeks of down move. This may lend support for further upmove for the daily NK.

S&P 500:
The past week has seen some consolidation after a big surge in the prior week. The current pattern resembles a "triangle", an continuation pattern, a breakout is to be expected.

The Fed meeting scheduled on 29th will certainly provide the "fuel" for the next big moves..
http://www.mrci.com/reports.asp

The levels to watch (emini S&P): 1273 (resistance) if broken will bring the market to 1300 level (0.618 of the bigger downmove) and 1220 (key support).

"Return of Bear Market" by Martin Pring (good read)
http://www.pring.com/articles/return.pdf

Big Picture: Long Term has not changed (monthly)...still bearish....
Medium term: Position to sell short on stock rallies..at key fibnode levels (S&P500:1298).
Short term: Possible short term uptrend next week..
Technicals: FTSE, Nikkei: Weekly MACD Histogram - Up (bullish) , ASX and S&P may turn up on weekly macd hist next week..

Trading ideas :
(please apply your risk management rules in all trades)
Rolling Options: Sell calls on Corns/ Cotton
Futures: Short Lean Hog, Long Sugar
Stocks Options: Long Puts (Tlab), Long Call (ABI)

Week of June 11th, Dow Jones, the Big Picture

2006-06-14T00:33:00.000+08:00

Mid Week Update...
Since the market is going nowhere tonite as i write, i thot of just looking at Dow from "far far"...
i am shocked of what i saw actually ....well, .look at the monthly first, and then the Qtrly, and then the Yearly....hughhhhh........what do u see ? ..... hmmmm....

i feel like buying 5 years leap put on DIA right now....and retire from trading everafter.......:-)
looks like a huge double top forming...it aint looking good....

comments ??

Week of June 11th

2006-06-10T11:49:00.000+08:00

(pls click the above image to enlarge...S&P500...)
S&P500: This week in wall street/ global markets had been been one of the most exciting week and truly challenged the wits of technicians ..! The various key support levels were tested last thursday in S&P, had an uncofirmed "wash & rinse", and had touched weekly key fibonnaci support... at 1252.

The friday's actions show possible uptrend going to next week...(look at S&P 60 mins chart, retracing to 0.382 level of the recent intraday high to the low..macd pointing higher)
FTSE remained above uptrend line, ASX and Nikkei are the weakest of the major indices.

Big Picture: Medium Term has not changed...still bearish..
Medium term: Position to sell short on stock rallies..at key fibnode levels.
Short term: Possible short term uptrend next week..
Technicals: S&P500, FTSE, ASX, Nikkei: Weekly MACD Histogram - Down (bearish)

Trading ideas (June 12-16th):
(please apply your risk management rules in all trades)

Rolling Options: Sell puts on Tbonds (Sep, 103-104)
Futures:
Long Sugar (near key fib support level), Short Lean Hog, Short Live Cattle (near Fib resistance)
Stocks: Possible short term (2-3 days) long Call play, mrvl, slb, bhp

Comments are welcome....!

Week of June 5th

2006-06-05T14:47:00.000+08:00

This is going to be an exciting week ahead for the markets...

NK225:
The daily shows some rebounce but the medium term still shows downtrend...

S&P500:
Daili shows higher low, short term may shfit from bear to bull trend...
Medium term has not changed the bearish stand..

Recommendation:
The rally in the next few days may be good selling points for short selling or long puts...
This rally may touch the 0.618 retracement of the major high to the recent low.

Me and My Guru, Joe Dinapoli

2006-05-25T17:04:00.000+08:00

Oh Ya, this is me.....and Joe DiNapoli, my Fibonnaci Guru and a great renown professional trader !