KEY TERMS
OVB: Outside Vertical Bar
VRCB: Volatility Reduced Compression Bar
Core Position: $50,000,000
PowerShares DB Agriculture (DBA):
09/07/2012 Closing Price: 30.24
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 27.94 – 27.40
Projected Weekly Range: .56
Trading 185,000 Shares
I.T. ANALYSIS:
- DBA is a comprehensive agricultural ETF. Holdings include fairly equally-weighted futures contracts in sugar #11, live cattle, corn, soybeans, cocoa, coffee, lean hogs, wheat, and cattle feeder.
- Although DBA closed out the previous week in the upper 20%, it failed to make new weekly highs. Instead, last week’s range was restricted to a lower high and higher low, forming an inside vertical bar. Friday’s close in the lower half of the weekly midrange, lower than Tuesday’s open and lower than the previous week’s close, all indicate trading should be lower this week. Commodities have recently struggled to continue the bullish momentum seen two months ago. Weak closes and insignificant price action lead us to believe trading should be slightly lower this week. If this week trades 29.88, a new I.T. top will form, signaling a correction has begun.
iPath DJ-UBS Grains (JJG):
09/07/2012 Closing Price: 63.36
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 62.25 on 08/20/2012; STOP @ 62.25
Current Upside Target = 70.95
Upcoming Cover Price: 64.93; Cover 17,400 (20%)
Projected Weekly Range: 2.32
Trading 87,000 Shares; COVERED 17,400 (20%) @ 64.45,
I.T. ANALYSIS:
- Initial trade risk was $191,400 or .38%. Current trade risk is 0%. Current trade profits are $115,536 or .23%.
- JJG is concentrated in agricultural grain futures, holding 46% soybeans, 30% wheat and 24% corn.
- JJG has formed an inside vertical bar for the second consecutive week. Nondirectional price action is characteristic during times of consolidation at the top and accumulation at the bottom of markets. Friday’s close barely lower than the weekly midrange is a weak indicator of future trading. The restricted range resulted in a Volatility Reduced Compression Bar, frequently seen near tops and bottoms. Failure to continue higher over the last two months has resulted in an additional Sell Coverage of 17,400 shares at 64.93.
SPDR Gold Shares (GLD):
09/07/2012 Closing Price: 168.44
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 158.81 on 08/21/2012; STOP @ 161.89
Upcoming Cover Prices: SELL 7,000 (20%) @ 169.35
Current Upside Target = 165.88 – 176.15
Projected Weekly Range: 5.33
Trading 35,000 Shares; COVERED 3,500 (10%) @ 164.12
I.T. ANALYSIS:
- Initial trade risk was $139,650 or .28%. Current trade risk is $0. Current trade profits are $321,930 or .64%.
- GLD’s single holding is gold bullion.
- GLD continued its exceptionally bullish climb last week, fulfilling 100% of our upside price target, published on July 21, 2012. We have issued a revised, more aggressive price target of 176.15. Price action was clearly bullish for the third week, closing in the upper 11% of the weekly range. The stagnant accumulation period from mid-May till mid-August has certainly been worth the wait; our highly anticipated long position is currently up $321,930 or .64% of our core position. Last week nearly met our second profit-taking price of 169.35 where we will sell an additional 7,000 shares and lock-in $75,460. There exists an 82% probability of trading 169.01 this week with a very small chance of retracing to 163.65.
09/07/2012 Closing Price: 46.23
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 43.67 on 08/21/2012; STOP @ 43.67
Current Upside Target = 47.91; Cover 19,200 (15%)
Projected Weekly Range: 1.99
Trading 128,000 Shares; COVERED 25,600 (20%) @ 45.49
I.T. ANALYSIS:
- Initial trade risk was $188,160 or .38%. Current trade risk is $0%. Current trade profits are $308,736 or .62%.
- JJC is an ETN that holds only a single commodity, the Copper High Grade futures contract.
- JJC finally made a substantial move, breaking through the strong technical resistance level of 45. Price action was decisively bullish and Friday’s close in the upper 1.5% was only three points off the weekly high. Our limit order to sell 20% at 45.05 or better was filled on Friday’s gap open at 45.49, locking in $45,592 in profits. Once 45.26 was traded last week, the I.T. trend was reversed to bullish, forming a higher top. Trading should be higher this week although we believe strong resistance near 47.25 will prevent another wildly bullish move. Look for our upside price target to be filled within the next two weeks.
United States Oil (USO):
09/07/2012 Closing Price: 35.88
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bearish.
Current Position: SHORT @ 35.45; STOP @ 36.46
Upcoming Break-Even Price: 34.44; Cover 31,800 (20%)
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 1.14
Trading 159,000 Shares
I.T. ANALYSIS:
- Initial trade risk was $160,590 or .32%. Current trade risk is the same. Current trade losses are $68,370 or .14%.
- USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
- Price action was slightly higher and virtually nondirectional as predicted last week. USO closed out the week only one point lower than the previous week and slightly above the midrange, giving little feedback for future trading. Our current position is yet to meet its break-even price of 34.44, even though the initial risk was only .32%. After two weeks of stagnant movement and coming within ten points of getting stopped out, we have become slightly pessimistic about our current position. Trading 34.96 will form an I.T. top and build momentum for our current short trade. Trading 36.46 will stop out our trade and continue the bullish rally from late June.
United States Natural Gas (UNG):
09/07/2012 Closing Price: 18.12
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: SHORT @ 20.39 on 08/09/12. STOP @ 19.50
Upcoming Cover Price: 17.27; Cover 40,000 (40%)
Current Downside Targets = 17.27 – 16.36
Projected Weekly Range: 1.26
Trading 100,000 Shares; COVERED 20,000 (20%) @ 18.35
I.T. ANALYSIS:
- Initial trade risk was $204,000 or .41%. Current trade risk is $0. Current trade profits are $222,400 or .44%.
- UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
- After coming within six points of stopping out our trade, UNG sold off to close out the week in the bottom 25%. Price action was bullish divergent, meaning last week made a higher high and a higher low, yet the weekly close was below the midrange and the previous week’s close. Friday’s intellectual close indicates prices should be definitively lower this week, trading 17.68 before 19.45. If selling pressure obtains, look for our downside price target of 17.27 to be achieved. 17.27 is also our second profit-taking price, where we will cover 40% of our original position.
09/07/2012 Closing Price: 127.29
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 122.23 on 08/09/12. STOP @ 124.78
Current Upside Target = 125.59 – 131.41
Projected Weekly Range: 2.26
Trading 100,000 Shares; COVERED 20,000 @ 124.74, COVERED 30,000 (30%) @ 125.59
I.T. ANALYSIS:
- Initial trade risk was $251,000 or .50%. Current trade risk is $0. Current trade profits are $404,000 or .81%.
- FXE seeks to track the movement of the Euro currency.
- Our upside price target of 125.59, established on 08/05/12, was achieved to the tick on the previous week’s high. FXE is continues to perform exceptionally well and currently our most profitable position. Our long trade was entered based on a dual VRCB OVB weekly pattern, a combination with relatively low risk yet very high probabilities of success. Since our favorable fill price of 122.23, FXE is yet to violate the previous week’s low, a sign of steady buying pressure. Once 126.75 was traded last week, the I.T. trend was reversed from bearish to bullish, a rare change occurring only once every 22 weeks. Look for prices to climb higher towards our revised price target of 131.41
iShares MSCI Emerging Markets Index (EEM):
09/07/2012 Closing Price: 40.64
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 37.05
Projected Weekly Range: .93
Trading 135,000 Shares
I.T. ANALYSIS:
- EEM seeks to replicate the performance of the MSCI Emerging Markets Index by investing in the underlying international securities.
- Our EEM short position was stopped out last week as markets rallied strong on Thursday and Friday. After violating the previous week’s low of 38.84, EEM rallied to trade 39.90, forming an OVB. This formed an I.T. top yet wasn’t supported by the bullish close. Price action was bullish, confirmed by Friday’s close in the upper 1%. Emerging countries struggle to find solid ground and are yet to see the support and directional movement of domestic markets. Our current position is flat due to market volatility reducing the probability of successful trades.
SPDR S&P 500 (SPY):
09/07/2012 Closing Price: 144.33
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 142.09 on 09/06/12. STOP 142.09
Current Upside Targets: 145.55 – 147.05
Projected Weekly Range: 3.01
Trading 39,000 Shares – COVERED 3,900 (10%) @ 144.06 – COVER 7,800 (20%) @ 145.55
I.T. ANALYSIS:
- SPY seeks to track the movement of the S&P 500 Index.
- After an underwhelming previous trading week, SPY continued the strong rally, making new four year highs. Tuesday’s trading violated the previous week’s low by six points then was followed by significant buying on Thursday, exceeding the previous week’s high of 142.08, forming an OVB. Price action was bullish and Friday’s close in the upper 2% indicates trading should be much higher this week with very little chance of retracing back down to last week’s low. SPY has already achieved 96% of our original price target of 145.55, established on June 16, 2012 at a closing price of 134.14. Last week’s breakout was greatly needed to continue the current rally and postpone any upcoming correction. Be aware of the FOMC announcement on Thursday in which investors are anticipating the announcement of QE3. Expect markets to collapse if no federal stimulus is declared.
