KEY TERMS
OVB: Outside Vertical Bar
VRCB: Volatility Reduced Compression Bar
Core Position: $50,000,000
PowerShares DB Agriculture (DBA):
09/21/2012 Closing Price: 29.78
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 28.59 – 28.34
Projected Weekly Range: .72
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.
- DBA experienced its worst single-week sell-off since May 2012. After the previous week closed at new yearly highs, last week’s close was down 3.5%, largely due to bearish price action in the soybean and corn futures markets. The extreme volatility resulted in a rare technical pattern where a confirmation bar violates the previous bottom, immediately following a new high bar. This bearish pattern has led us to believe a correction will follow, stopping within the 28.59 – 28.34 price range. DBA has failed to establish a definitive direction since late July; for this reason we remain flat.
iPath DJ-UBS Grains (JJG):
09/21/2012 Closing Price: 60.32
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 56.94 – 55.80
Projected Weekly Range: 2.33
Trading 87,000 Shares
I.T. ANALYSIS:
- JJG is concentrated in agricultural grain futures, holding 46% soybeans, 30% wheat and 24% corn.
- Our previous long position in JJG was profitably exited at 62.25, nearly two dollars higher than last week’s close. Our tight trailing stops limit initial risk and maximize locked-in profits. JJG is currently in a short-term correction, one that we believe will not violate the 55 price point. Price action was clearly bearish, confirmed by Friday’s close below the midrange, below the previous close and below the open. All trends are currently bullish and we rarely trade against the trend. This results in a higher percentage of profitable trades with smaller equity drawdowns. We will look for buy entries near our downside targets.
SPDR Gold Shares (GLD):
09/21/2012 Closing Price: 171.96
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 158.81 on 08/21/2012; STOP @ 166.29 OR Weekly Close Below 170.06
Current Upside Target = 165.88 – 176.15: COVER 7,000 (20%)
Projected Weekly Range: 4.80
Trading 35,000 Shares; COVERED 3,500 (10%) @ 164.12, COVERED 7,000 (20%) @ 169.35
I.T. ANALYSIS:
- Initial trade risk was $139,650 or .28%. Current trade risk is $0. Current trade profits are $414,540 or .83%.
- GLD’s single holding is gold bullion.
- Our current GLD position increased equity last week while most other markets gave back profits to lower prices. Although upward acceleration slowed last week, price action was still bullish, never retracing to the previous week’s midrange. The short-term trend reveals that the weekly range was very restricted until Friday, where a gap higher open violated the previous week’s high. The first four days’ range would have resulted in a VRCB, indicating buying pressure was beginning to be neutralized by selling pressure. We believe this wild upward move will slow down, yet prices will continue higher towards 176.15. Look to cover another 7000 shares at our upside target, locking in $121,380. If this week trades lower, look to exit the remaining 70% of our position at 166.29 or a weekly close below 170.06.
09/21/2012 Closing Price: 47.92
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 43.67 on 08/21/2012; STOP @ 46.34 OR Weekly Close Below 47.28
Current Upside Target = 47.91 – 52.23
Projected Weekly Range: 2.26
Trading 128,000 Shares; COVERED 25,600 (20%) @ 45.49, COVERED 19,200 (15%) @ 48.20
I.T. ANALYSIS:
- Initial trade risk was $188,160 or .38%. Current trade risk is $0. Current trade profits are $487,168 or .97%.
- JJC is an ETN that holds only a single commodity, the Copper High Grade futures contract.
- JJC saw extreme volatility on Monday as prices soared to 49.17 then fell back down to 47.28. Tuesday through Friday saw very little change and closed out the week slightly below the midrange. Price action was bullish divergent, meaning last week made a higher high and higher low, yet experienced a bearish weekly close. Strong resistance is currently pushing down on JJC; three continuous weekly closes above the Bollinger band hasn’t occurred since 2009. Friday’s close indicates trading should open lower this week while the remainder of the week should be flat to slightly lower. Pay close attention to the current exit prices as they are within the expected weekly trading range.
United States Oil (USO):
09/21/2012 Closing Price: 34.49
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bearish.
Current Position: FLAT
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 2.01
Trading 159,000 Shares
I.T. ANALYSIS:
- USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
- The November contract of WTI fell 9% last week, resulting in an equal plummet for USO. Monday fell to 35.23 and Wednesday traded down to 33.96, violating the previous five weekly lows. This trading range would normally be broken down into two or three weeks, indicating a top had formed and a correction had begun. Because this occurred so quickly, we believe this is only an intra-trend price correction and support will keep prices above 32.46. Our longer-term price objectives remain to the upside as we believe the well-established rally will continue towards 38. Although last week’s bearish price action could follow-through to this week, we believe trading will be slightly higher. We remain flat until higher quality trade opportunities arise.
United States Natural Gas (UNG):
09/21/2012 Closing Price: 19.72
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Working Orders: BUY @ 19.83; STOP @ 18.88
Current Upside Target = 23.57 – 24.11
Projected Weekly Range: 1.62
Trading 150,000 Shares
I.T. ANALYSIS:
- Upcoming initial trade risk is $142,500 or .29%.
- UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
- Following a very bullish, weekly confirmation bar, UNG experienced reduced volume and reduced volatility last week. Last week’s range failed to violate the previous week’s high or low, creating an inside vertical bar, while the range of only .93 formed a VRCB. This combination has provided an ideal trade opportunity to buy-in with the I.T. trend. There currently exists a 78% chance of trading 20.66 before 18.16 and Friday’s bullish close confirms this. The first correction following an I.T. trend reversal has proven to be a highly profitable pattern with an above average probability of success. For these reasons, we have issued a working order to BUY 150,000 shares of UNG at 19.83. We will exit the trade on the formation of an OVB at 18.88, a pattern with a one in then chance of occurring.
09/21/2012 Closing Price: 129.05
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 122.23 on 08/09/12. STOP @ 127.72 OR Weekly Close Below 128.39
Current Upside Targets= 131.41 – 137.89
Projected Weekly Range: 3.03
Trading 100,000 Shares; COVERED 20,000 (20%) @ 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 $492,000 or .98%.
- FXE seeks to track the movement of the Euro currency.
- Our current FXE long position has performed well since initiated in early August. Our long-term outlook has been less than optimistic for the euro, which has resulted in covering 50% of our position. Open trade profits are the highest of all our current position and have locked-in a total of $425,500 or .85%. FXE struggled last week, violating the previous week’s high by only 3 points, then falling back down below 129. Price action was bullish divergent, closing out the week in the lower 25% of the trading range. If the short-term trend follows through this week, expect trading to be slightly lower. Pay close attention to our current stops: a range violation at 127.72 or a weekly close below 128.39.
iShares MSCI Emerging Markets Index (EEM):
09/21/2012 Closing Price: 41.78
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Target = 48.19 – 49.23
Projected Weekly Range: 1.92
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.
- As with most other markets, EEM experienced reduced volatility and trading volume last week. Price action was nondirectional with a lower high and higher low and close near the midrange. Expect trading to remain relatively flat for this final week of September. After the previous week closed above the resistance Bollinger band, trading has been consistently lower. We stand by our expectation that EEM will rally back to retest May 2011 prices before trading below October 2011 levels. Monthly trading range expectations of 2.85 have already been exceeded; trading above 42.83 is exceptional and abnormal. We maintain our flat position until volatility normalizes and lower risk trades can be placed.
SPDR S&P 500 (SPY):
09/21/2012 Closing Price: 147.19
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 142.09 on 09/06/12. STOP @ 143.45
Current Upside Targets: 154.21 – 159.39
Projected Weekly Range: 3.49
Trading 39,000 Shares; COVERED 3,900 (10%) @ 144.06, COVERED 7,800 (20%) @ 145.55
I.T. ANALYSIS:
- SPY achieved 100% of our upside price targets of 145.55 and 147.05, established on June 16, 2012.
- Initial trade risk was $76,830 or .15%. Current trade risk is $0. Current trade profits are $173,901 or .35%.
- SPY seeks to track the movement of the S&P 500 Index.
- Our current long position in SPY has remained a solid performer, currently sitting with $0 in trade risk. After two weeks of strong buying, SPY has begun to see an increase in selling pressure. Last week’s reduced trading range is largely contributed to an equalization of buyers and sellers, not from a reduction in volume. Price action was nondirectional to slightly bearish; the lower high and higher low was offset by Friday’s close in the lower 25% of the weekly trading range. SPY is yet to experience a confirmed correction since the current rally began in early June; we believe this will change by the end of the year. Friday’s close and the significant increase in sellers indicate trading should be slightly lower this week. Pay close attention to our current range violation stop price of 143.45.
