Commodity ETFs fall as bears take control

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

CurrencyShares Euro Trust (FXE):
10/12/2012 Closing Price: 128.71
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: LONG @ 128.87 on 10/08/12. STOP @ 127.45
Upcoming Break-Even Price: 130.30; Cover 10,000 (20%)
Current Upside Targets = 132.20
Projected Weekly Range: 1.53
Trading 50,000 Shares

I.T. ANALYSIS:

  • Initial trade risk was $71,000 or .14%. Current trade risk is the same. Current trade losses are $8,000 or .02%.
  • FXE seeks to track the movement of the Euro currency.
  • We entered a conservative long position in FXE last week, buying in at 128.87. Monday’s gap lower open provided the opportunity to enter the market at a more desirable price point, reducing initial trade risk and lowering the break-even price. If 130.30 trades this week, we will exit 10,000 shares (20%) and move the STOP up to our entry price. Price action was bearish divergent last week, violating the previous week’s low yet closing above the midrange. The restricted trading range and reduced volatility resulted in a VRCB, a range less than the preceding eight weeks. Pay attention to the current stop price of 127.45 as trading could be lower this week.

iShares MSCI Emerging Markets Index (EEM):
10/12/2012 Closing Price: 41.27
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Target = 48.19 – 49.23
Projected Weekly Range: 0.94
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.
  • Price action for EEM has been very choppy the previous four weeks, reversing directions for the fourth week in a row. Still trading within the very bullish weekly range ending 09/14/12, EEM has completely failed to move in a clear direction. Last week’s price action was bearish, making a lower low and lower high. Friday’s close at the midrange indicates the sideways movement should continue this week. EEM also formed a Reduced Volatility Compression Bar last week, indicating buying and selling pressure were nearly equal. Trading volume was average, leading us to believe trading will be largely within the previous week’s range, or slightly lower.

SPDR S&P 500 (SPY):
10/12/2012 Closing Price: 142.89
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Targets: 154.21 – 159.39
Projected Weekly Range: 3.31
Trading 39,000 Shares

I.T. ANALYSIS:

  • SPY seeks to track the movement of the S&P 500 Index.
  • As with many other markets, SPY has displayed uncertainty over the last four weeks. Just when prices find support, bears reverse the trading pressure and prices fall back down. Last week’s price action was bearish, confirmed by Friday’s close below the midrange, below the previous close and below the open. The current correction continued lower, making new weekly lows and closing in the bottom 10% of the weekly trading range. Although price action indicates trading should be lower this week, nondirectional movement has plagued the markets and leads us believing this will continue for the remainder of the year. Over the last nine weeks, ETF analysis and trading has resulted in $1,615,614 (3.23%) in total profits, $1,199,039 of which is closed and locked-in.

Parrish-Hicks 2012 Performance Report

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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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