Commodity ETFs may be running out of steam

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

CurrencyShares Euro Trust (FXE):
08/31/2012 Closing Price: 124.98

INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bearish.
Current Position: LONG @ 122.23 on 08/09/12. STOP @ 123.75 OR Weekly Close Below 124.11
Current Upside Target = 125.59; Cover 30,000 Shares
Projected Weekly Range: 1.78
Trading 100,000 Shares; COVERED 20,000 @ 124.74

I.T. ANALYSIS:

  • Our upside price target of 125.59, established on 08/05/12, was achieved to the tick on last week’s high.
  • Initial trade risk was $251,000 or .50%. Current trade risk is $0. Current trade profits are $270,200 or .54%.
  • FXE seeks to track the movement of the Euro currency.
  • FXE continues to be one of our best performing current trades. Our long position, initiated after dual VRCBs followed by an OVB, has locked-in profits of $171,800 or .34%. Since the end of July, there hasn’t been a single weekly low violation, a very strong sign of steady bullish price action. Last week’s low was near the previous week’s close and far above the previous midrange, showing very little selling pressure. Now approaching the previous I.T. top of 126.74, FXE is attempting to reverse the trend to bullish.

iShares MSCI Emerging Markets Index (EEM):
08/31/2012 Closing Price: 39.28
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: SHORT @ 39.97 on 08/23/2012. STOP @ 39.97
Current Downside Target = 37.05
Projected Weekly Range: .93
Trading 135,000 Shares; COVERED 27,000 @ 39.09

I.T. ANALYSIS:

  • Initial trade risk was $118,800 or .24%. Current trade risk is $0. Current trade profits are $98,280 or .20%.
  • EEM seeks to replicate the performance of the MSCI Emerging Markets Index by investing in the underlying international securities.
  • All probabilities and predictions played to our favor last week as EEM continued to fall. We covered 27,000 shares at 39.09 and moved our STOP price to our entry price, guaranteeing a profitable trade. On the short-term trend, EEM has made lower lows and lower highs for seven of the previous eight trading days. Even after a Friday rally, the weekly close was significantly below the previous week’s low, indicating prices should continue to trade lower. If 38.84 trades this week, a new I.T. top will form, signaling a correction is in effect.

SPDR S&P 500 (SPY):

08/31/2012 Closing Price: 141.16
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT.
Current Upside Targets: 145.55 – 147.05
Projected Weekly Range: 2.34
Trading 39,000 Shares

I.T. ANALYSIS:

  • SPY seeks to track the movement of the S&P 500 Index.
  • SPY failed to continue the bullish momentum of the current rally, never even retracing back to the previous week’s high of 143.09. Friday’s close below the previous close and near the midrange leave us believing trading will be nondirectional this week, if not slightly lower. The previous three weekly lows have been within .18 of each other, designating strong support near 140. Once this support zone is broken through, expect a moderate correction to follow. SPY needs to see strong buying pressure and a breakout through 143.10 in the next two weeks or prices may continue to settle, forming an I.T. top.
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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