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

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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

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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

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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

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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

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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

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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

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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