Commodity ETFs look for pullback to go long

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

CurrencyShares Euro Trust (FXE):

08/24/2012 Closing Price: 124.35
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bearish.
Current Position: LONG @ 122.23 on 08/09/12. STOP @ 122.23
Current Upside Target = 125.59
Projected Weekly Range: 1.93
Trading 100,000 Shares; COVERED 20,000 @ 124.74

I.T. ANALYSIS:

  • Initial trade risk was $251,000 or .50%. Current trade risk is $0. Current trade profits are $219,800 or .44%.
  • FXE seeks to track the movement of the Euro currency.
  • The euro saw significant support last week, opening Monday at 122.40 and rallying up to make a weekly high of 125.13. We exited 20% of our current long position at 124.74 on Thursday, profiting $50,200. FXE moved high enough for our complete STOP price to be moved up to our entry price of 122.23. Price action was very bullish and Friday’s close definitively indicates the direction of this week’s trading. Expect prices to surpass our upside target of 125.59 with very little chance of trading back down to 122.35 beforehand.

iShares MSCI Emerging Markets Index (EEM):

08/24/2012 Closing Price: 40.05
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: SHORT @ 39.97 on 08/23/2012. STOP @ 40.85
Break-Even Price: 39.09; Cover 20%
Current Downside Target = 37.05
Projected Weekly Range: .85
Trading 135,000 Shares

I.T. ANALYSIS:

  • Initial trade risk was $118,800 or .24%. Current trade risk is the same. Current trade losses are $10,800 or .02%.
  • EEM seeks to replicate the performance of the MSCI Emerging Markets Index by investing in the underlying international securities.
  • Our short entry position was filled last week at 39.97 after EEM violated the previous week’s high. This formed an OVB to the previous two weekly VRCBs. Such patterns rarely occur and Friday’s close to the downside are all strong signals for a continuation of downward movement. If directional momentum continues, look for our break-even price of 37.05 to be achieved where 20% of the short position will be covered. There is a 78% chance 39.69 will trade before rallying back up to 40.85. Keep this in mind as we are currently above our entry price of 39.97, providing a second chance to enter a short position.

SPDR S&P 500 (SPY):

08/24/2012 Closing Price: 141.51
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT.
Current Upside Targets: 145.55 – 147.05
Projected Weekly Range: 2.16
Trading 39,000 Shares

I.T. ANALYSIS:

  • SPY seeks to track the movement of the S&P 500 Index.
  • SPY experienced very volatile movement last week as new highs on Tuesday were followed by a correction back down to Friday. SPY closed out the week with an OVB forming on Friday’s daily bar, indicating trading should be higher on Monday and Tuesday. The short-term, I.T. and major term trends are all bullish and we strongly believe there is still greater upside potential. Look for an early intraweek rally to occur, violating 143.10 before 140.21. We believe our upside price targets could be achieved by the end of Q3 if strong closes and momentum continue. Any correction of at least 10 points off the current high will be analyzed for optimal buy entries.
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About the Author
Jim Parrish, Kris Hicks and Robert Calhoun

Parrish Hicks Capital Research is a trading and technical analysis firm that specializes in Energy and Metal commodity futures. The two founders, Jim Parrish and Kris Hicks, have a combined 38 years’ experience in the commodity business and in 2011 accurately forecasted both $25 moves to the downside in May and July and the $25+ move to the upside in October. They also called the all-time high day for Gold on September 6, 2011 and forecasted a projected downside target of 1528.10 in March 2012.  Their trading methodology has a high degree of accuracy which confirms tops/bottoms, projected trading ranges and projected targets for those ranges. Their expertise is focused on 16 commodities plus the comparable ETF markets. You can reach them at Jim@ParrishHicks.com and Kris@ParrishHicks.com or at www.ParrishHicks.com.

IMPORTANT DISCLOSURE

Transactions in ETF (Exchange Traded Funds) carry a high degree of risk. This material is not intended as an offer or solicitation for the purchase of any financial instrument. The data and these comments are provided for information purposes only and may or may not be intended to be used for specific trading strategies. ETF trading is risky and Parrish Hicks Capital Research assumes no liability for the use of any information contained herein. Any examples are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. ETF strategies mentioned herein may not be suitable for all investors. The opinions and recommendations herein do not take into account individual client circumstances, objectives or needs and are not intended as recommendations of a particular ETF or ETF strategies to a particular client. The recipient of this report must make his own independent decisions regarding any ETF instrument to a particular client.

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